As filed with the Securities and Exchange Commission on May 23, 2002.
                                                                                    Registration No. 333-
                                                                                  
=====================================================================================================================
                                          SECURITIES AND EXCHANGE COMMISSION
                                                 Washington, DC 20549
                                                  ------------------
                                                       FORM S-1
                                                REGISTRATION STATEMENT
                                                         UNDER
                                              THE SECURITIES ACT OF 1933
                                                  -------------------
                                              DARLING INTERNATIONAL INC.
                                (Exact name of Registrant as specified in its charter)
               Delaware                                  2070                               36-2495346
    (State or Other Jurisdiction of          (Primary Standard Industrial                (I.R.S. Employer
    Incorporation or Organization)            Classification Code Number)               Identification No.)
                                                  -------------------
                                        251 O'Connor Ridge Boulevard, Suite 300
                                                  Irving, Texas 75038
                                                     972.717.0300
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
                                                  -------------------
                                                 Joseph R. Weaver, Jr.
                                             General Counsel and Secretary
                                              Darling International Inc.
                                        251 O'Connor Ridge Boulevard, Suite 300
                                                  Irving, Texas 75038
                                                     972.717.0300
                               (Name, Address Including Zip Code, and Telephone Number,
                                      Including Area Code, of Agent for Service)
                                                  ------------------
                                                    With copies to:
                                Fredric J. Klink, Esq.                         Guy Young, Esq.
                                     Dechert                                Haynes and Boone, LLP
                          4675 MacArthur Court, Suite 1400               1000 Louisiana, Suite 4300
                           Newport Beach, California 92660                  Houston, Texas 77002
                                   949.442.6000                                  713.547.2000
                                                   -----------------
     Approximate  date of  commencement  of  proposed  sale to the  public:  At such time or times on and  after  this
Registration Statement becomes effective as the selling stockholders may determine.
     If any of the  securities  being  registered  on this Form are to be  offered on a delayed  or  continuous  basis
pursuant to Rule 415 under the Securities Act of 1933, check the following box. [x]
     If this Form is filed to  register  additional  securities  for an offering  pursuant  to Rule  462(b)  under the
Securities  Act,  please check the following box and list the  Securities  Act  registration  statement  number of the
earlier effective registration statement for the same offering. [ ] __________________
     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c) under the  Securities  Act, check the
following  box and list the  Securities  Act  registration  statement  number of the  earlier  effective  registration
statement for the same offering. [ ] _________________
     If this form is a  post-effective  amendment  filed pursuant to Rule 462(d) under the  Securities  Act, check the
following  box and list the  Securities  Act  registration  statement  number of the  earlier  effective  registration
statement for the same offering. [ ] ___________________
     If delivery of the  prospectus is expected to be made pursuant to Rule 434,  please check the following  box. [ ]
___________________

                         CALCULATION OF REGISTRATION FEE
==================================================================================================
Title of Each Class                    Proposed Maximum    Proposed Maximum
of Securities to be      Amount to be  Offering Price Per  Aggregate Offering        Amount of
    Registered           Registered         Unit               Price             Registration Fee
--------------------------------------------------------------------------------------------------
 Common Stock, par        46,705,086      $0.85(1)           $39,699,323(1)           $3,653
 value $0.01 per share        shares
--------------------------------------------------------------------------------------------------
 Series A Preferred          100,000    $100.00(2)           $10,000,000(2)             $920
 Stock, par value             shares
 $0.01 per share
==================================================================================================
(1)  Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities
     Act of 1933.  Based on the average of the high and low prices of the common stock  reported on the American Stock
     Exchange on May 21, 2002.
(2)  Estimated  solely for purposes of calculating the  registration fee pursuant to Rule 457(a) under the Securities
     Act of 1933.
                                                  ------------------
The  Registrant  hereby  amends this  Registration  Statement  on such date or dates as may be  necessary to delay its
effective date until the Registrant shall file a further  amendment which  specifically  states that this Registration
Statement  shall  thereafter  become  effective in accordance with Section 8(a) of the Securities Act of 1933 or until
this  Registration  Statement shall become  effective on such date as the Commission,  acting pursuant to said Section
8(a), may determine.
======================================================================================================================


The  information  in this  prospectus  is not complete  and may be changed.  The
selling  stockholders  may not sell  these  securities  until  the  registration
statement filed with the Securities and Exchange  Commission is effective.  This
prospectus is not an offer to sell these securities and is not soliciting offers
to buy these securities in any state where the offer or sale is not permitted.

                             Subject to Completion
                  Preliminary Prospectus dated May 22, 2002
PROSPECTUS
----------

               [Logo of Darling International Inc. to be inserted]

                       46,705,086 Shares of Common Stock
                   100,000 Shares of Series A Preferred Stock

                               ------------------

     Investing  in our common stock or our Series A Preferred  Stock  involves a
high degree of risk which is described in the "Risk Factors"  section  beginning
on page 8 of this  prospectus.  We urge you to carefully read the "Risk Factors"
section before you make your investment decision.

                               -------------------

     We have prepared this prospectus to allow the selling  stockholders we have
identified  herein,  including  their  transferees,  pledgees,  donees and their
successors, to offer for resale up to:

     o 46,705,086 shares of our common stock held by them; and

     o 100,000 shares of our Series A Preferred Stock held by them.

     The securities  offered by this  prospectus  could be sold in several ways,
including,  in the case of the common  stock,  in  transactions  on the American
Stock  Exchange,  or in the case of the common  stock or the Series A  Preferred
Stock,  at  prevailing  market  prices  at the  time of  sale,  or in  privately
negotiated  transactions  at prices  agreed  upon by the  parties or through any
other means described under the heading "Plan of Distribution" beginning on page
53. We cannot  assure  you that the  selling  stockholders  will sell all or any
portion of the common stock or the Series A Preferred  Stock  offered under this
prospectus.  Our company is not  selling any shares of common  stock or Series A
Preferred  Stock in this offering and therefore we will not receive any proceeds
from any sale of securities  offered by this prospectus.  We are registering the
shares  of  common  stock  and  Series A  Preferred  Stock  offered  under  this
prospectus to satisfy registration rights of the selling  stockholders.  We have
agreed  to pay for all  expenses  in  connection  with the  registration  of the
securities offered by this prospectus.

     Our common stock is quoted on the American  Stock Exchange under the symbol
"DAR." On May 21,  2002,  the  closing  sales  price of our common  stock on the
American Stock  Exchange was $0.85 per share.  There is no public market for the
Series A  Preferred  Stock,  and we do not  intend to apply for  listing  of the
Series A Preferred Stock on any securities exchange or for quotation through any
automated quotation system.

     Our principal  executive office is located at 251 O'Connor Ridge Boulevard,
Suite 300, Irving, Texas 75038 and our telephone number is 972.717.0300.

     No  underwriter or any other person has been engaged to facilitate the sale
of the securities in this offering.

     Neither the  Securities and Exchange  Commission  nor any state  securities
commission has approved or disapproved of these securities or determined if this
prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.

                               -----------------
                The date of this prospectus is __________, 2002



                               TABLE OF CONTENTS
                                                                           Page
                                                                           ----

Forward-Looking Statements.....................................................1
Prospectus Summary.............................................................1
Summary Historical And Pro Forma Consolidated Financial Data...................5
Risk Factors...................................................................8
Recapitalization..............................................................15
Use Of Proceeds...............................................................16
Market For Common Equity And Related Stockholder Matters......................16
Dividend Policy...............................................................16
Capitalization................................................................17
Selected Historical And Pro Forma Consolidated Financial Data.................18
Management's Discussion And Analysis Of Financial Condition And Results
Of Operations.................................................................20
Our Business..................................................................27
Our Management................................................................33
Report Of The Compensation Committee..........................................40
Compliance With Section 16(a) Of The Exchange Act.............................41
Certain Relationships And Related Transactions................................41
Performance Graph.............................................................42
Security Ownership Of Certain Beneficial Owners And Management................43
Description Of Senior Credit Agreement........................................46
Description Of Capital Stock..................................................48
Selling Stockholders..........................................................51
Plan Of Distribution..........................................................53
Material U.S. Federal Tax Considerations......................................55
Legal Matters.................................................................59
Experts.......................................................................59
Where You Can Find More Information...........................................59
Index To Consolidated Financial Statements...................................F-1




                           FORWARD-LOOKING STATEMENTS

     This prospectus includes  forward-looking  statements.  We have based these
forward-looking  statements on our current  expectations  and projections  about
future  events.   These   forward-looking   statements  are  subject  to  risks,
uncertainties  and  assumptions  that may cause our  actual  results,  levels of
activity,  performance,  or  achievements  to be materially  different  from any
future results,  levels of activity,  performance,  or achievements expressed or
implied by such  forward-looking  statements.  Factors that could  contribute to
these  differences are discussed in the "Risk Factors" section beginning on page
8 of this  prospectus,  and  elsewhere in this  prospectus  as well as in our
previous filings with the SEC.

     In some cases, you can identify  forward-looking  statements by terminology
such  as  "may,"  "will,"   "should,"   "could,"   "would,"   "expect,"  "plan,"
"anticipate,"  "believe," "estimate,"  "continue," or the negative of such terms
or other similar expressions.  All forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements included in this prospectus.

     We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information,  future events or otherwise.
In light of these risks,  uncertainties  and  assumptions,  the  forward-looking
events discussed in this prospectus might not occur.

     We urge you not to unduly rely on forward-looking  statements  contained or
incorporated by reference in this prospectus.

                               ------------------

     The terms "Darling," "our," "we" and "us" as used in this prospectus, refer
to Darling International Inc. and its wholly-owned subsidiaries, except where it
is clear that the term refers only to the parent company.

     We urge you to rely only on the information  contained in this  prospectus.
We have not, and the selling  stockholders have not, authorized any other person
to provide you with different information. If anyone provides you with different
or  inconsistent  information,  we  urge  you not to  rely  on it.  The  selling
stockholders   are  not  making  an  offer  to  sell  these  securities  in  any
jurisdiction  where  the offer or sale is not  permitted.  We urge you to assume
that the information  appearing in this prospectus is accurate as of the date on
the front cover of this  prospectus  only.  Our business,  financial  condition,
results of operations and prospects may have changed since that date.

     We have not  undertaken  any  action  to  permit a public  offering  of the
securities offered by this prospectus outside the United States or to permit the
possession or distribution of this prospectus outside the United States. Persons
outside  the United  States who come into  possession  of this  prospectus  must
inform themselves about and observe any restrictions relating to the offering of
the  securities  offered  by  this  prospectus  and  the  distribution  of  this
prospectus outside of the United States.

                               PROSPECTUS SUMMARY

     This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that may
be  important  to you.  We urge you to read  the  entire  prospectus  carefully,
including the "Risk  Factors"  section and the financial  statements and related
notes, before making an investment decision.

                           Darling International Inc.

     Founded by the Swift meat packing interests and the Darling family in 1882,
we were  incorporated  in  Delaware  in 1962  under  the name  "Darling-Delaware
Company,  Inc." On December 28, 1993, we changed our name from "Darling-Delaware
Company, Inc." to "Darling International Inc."

     We are a recycler of food  processing  by-products.  We collect and recycle
animal processing  by-products and used restaurant cooking oil. In addition,  we
provide  grease trap  collection  services to  restaurants.  We process such raw
materials at 26 facilities  located  throughout  the United States into finished
products such as tallow, meat



and  bone  meal  and  yellow  grease.  We sell  these  products  nationally  and
internationally,  primarily to producers of various  industrial  and  commercial
oleo-chemicals,  soaps,  pet foods and livestock feed, for use as ingredients in
their products or for further processing into basic chemical compounds.

     Our principal  executive office is located at 251 O'Connor Ridge Boulevard,
Suite 300,  Irving,  Texas 75038 and our telephone  number is  972.717.0300.  We
maintain a site on the World Wide Web at the  address  http://www.darlingii.com.
The information on our Web site is not a part of this prospectus.

                                Preliminary Note

     The shares of our common stock and Series A Preferred Stock covered by this
prospectus  were issued to our lenders as part of a reduction  in the  principal
amount and  restructuring  of our  indebtedness  (the  "Recapitalization").  The
Recapitalization  was  approved  by our  stockholders  at an annual  meeting  of
stockholders  held on May 10, 2002 and was made effective as of that date. For a
summary description of the Recapitalization, see "Recapitalization."

                          The Offering of Common Stock

Securities offered for resale
by the selling stockholders...... Up to 46,705,086 shares of common stock, par
                                  value $0.01 per share, held by them.

Voting Rights.................... Holders of common stock will have one vote
                                  per share.

Use of Proceeds.................. The  selling  shareholders  will  receive
                                  all of the net proceeds from the sale of
                                  the securities sold under this prospectus.
                                  We will not receive any of the proceeds from
                                  those sales.

Dividends........................ We do not expect to pay dividends on our
                                  common stock in the foreseeable future. We
                                  anticipate  that all  future earnings, if
                                  any, generated from operations will be
                                  retained to develop and expand our business.

American Stock Exchange symbol... DAR.




                                       2



                    The Offering of Series A Preferred Stock

Securities offered for resale by  Up to 100,000 shares of Series A Preferred
the selling stockholders......... Stock, par value $0.01 per share, held by
                                  them.

Voting Rights...................  Holders of the Series A Preferred Stock will
                                  have no voting rights as to general corporate
                                  matters except as provided by Delaware law
                                  or, in limited circumstances, as provided in
                                  the certificate of designation relating to
                                  the Series A Preferred Stock. See
                                  "Description of Capital Stock-- Preferred
                                  Stock-- Series A Preferred Stock-- Voting
                                  Rights."

Use of Proceeds.................  The selling stockholders will receive all of
                                  the net proceeds from the sale of the
                                  securities sold under this prospectus. We
                                  will not receive any of the proceeds from
                                  those sales.

Dividends.......................  We will pay dividends on the Series A
                                  Preferred Stock out of funds legally
                                  available for the payment of dividends an an
                                  annual fixed rate of 6% on the original issue
                                  price of $100 per share. Dividends on the
                                  Series A Preferred Stock will be cumulative
                                  from the issue date, whether or not declared,
                                  and are to be either paid in cash
                                  semi-annually or, at our election may be
                                  accumulated, in which case the dividends will
                                  be added to the original issue price, and
                                  dividends will thereafter accrue on the
                                  original issue price as so adjusted. However,
                                  our new amended and restated senior credit
                                  agreement prohibits us from  paying any cash
                                  dividends while any indebtedness remains
                                  outstanding under such agreement. See
                                  "Description of Senior Credit Agreement."

Liquidation Preference..........  $100 per share liquidation preference, plus
                                  all accumulated dividends and accrued and
                                  unpaid dividends not yet accumulated.

Mandatory Redemption; Change of
Control.........................  We must redeem all shares of the Series A
                                  Preferred Stock outstanding upon the earliest
                                  to occur of:

                                    o    a change of control of our company,

                                    o    a sale of all or substantially all of
                                         our consolidated assets,

                                    o    a dissolution or liquidation of our
                                         company, and

                                    o    May 10, 2007,

                                   to the extent we have legally available
                                   funds, at a redemption price equal to the
                                   aggregate original issue price of the
                                   shares to be redeemed, plus accumulated
                                   dividends and accrued and unpaid dividends
                                   not yet accumulated to the date of
                                   redemption.

Optional Redemption..............  Subject to the prior payment in full of all
                                   indebtedness outstanding under our senior
                                   credit agreement, we may redeem shares of
                                   Series A Preferred  Stock in multiples of

                                       3


                                   not less than $1 million at any time, upon
                                   30 days notice, at a redemption price equal
                                   to the sum of the original issue price of
                                   the shares to be redeemed, plus accumulated
                                   dividends and accrued and unpaid dividends
                                   not yet accumulated to the date of
                                   redemption. If less than all shares of
                                   Series A Preferred Stock are to be redeemed,
                                   they are required to be redeemed pro-rata
                                   based on the number of shares of Series A
                                   Preferred Stock owned.

Ranking..........................  With respect to dividends and liquidation
                                   preference, the Series A Preferred Stock
                                   will rank senior to our common stock and
                                   senior to other future series of our
                                   preferred stock. We may issue additional
                                   series of preferred stock that rank junior
                                   to the Series A Preferred Stock without a
                                   vote of the holders of the Series A
                                   Preferred Stock. We may only create series
                                   or classes of preferred stock that rank
                                   senior to or on a parity with the Series A
                                   Preferred Stock if the creation of those
                                   senior shares is approved by the holders of
                                   66 2/3% of the then outstanding shares of
                                   the Series A Preferred Stock.

Listing..........................  The Series A Preferred Stock is not listed
                                   for trading on any securities exchange or
                                   market, and we do not currently intend to,
                                   nor are we required to, list the shares of
                                   Series A Preferred Stock on any securities
                                   exchange or market.


We urge you to refer to the section entitled "Risk Factors" for an explanation
of the risks of investing in our common stock or our Series A Preferred Stock.






                                       4

          SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

     The following summary historical and pro forma consolidated  financial data
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition  and Results of  Operations"  and our audited  consolidated
financial  statements  and  related  notes  thereto and  unaudited  consolidated
financial  statements  and related  notes  thereto  included  elsewhere  in this
prospectus.  The summary pro forma data does not purport to  represent  what our
results  would  have  been if the  Recapitalization  had  occurred  at the dates
indicated.  The Pro Forma columns  included in the Operating  Data for the three
months ended March 30, 2002 and the fiscal year ended December 29, 2001, derived
from elsewhere in this  prospectus,  reflect the effect of the  Recapitalization
had it occurred at the  beginning of such  periods.  The Pro Forma Balance Sheet
Data as of March 30, 2002 and December 29, 2001,  derived from elsewhere in this
prospectus,  reflect the effect of the Recapitalization as if it had occurred on
such dates.

-----------------------------------------------------------------------------------------------------------------
                                                             Fiscal Year Ended (a)
                               ----------------------------------------------------------------------------------
                                                                                   
                               ----------------------------------------------------------------------------------
                               December 29,     December 29, December 30,  January 1,   January 2,   January 3,
                                  2001              2001         2000         2000        1999          1998
                                Pro Forma          Actual       Actual       Actual      Actual        Actual
-----------------------------------------------------------------------------------------------------------------
                                                (in thousands, except ratio and share data)
Operating Data:
   Net sales                    $ 255,974       $255,974     $242,795      $258,570     $ 337,031    $444,142
                                ---------       --------     --------      --------     ---------    --------
   Cost of sales and
     operating expenses           196,778        196,778      190,283       210,879       283,822     362,787
   Selling, general and
     administrative expenses       28,594         28,594       26,736        26,773        33,073      33,247
   Depreciation and
     amortization                  26,634         26,634       31,181        32,912        32,418      29,751
                                ---------       --------     --------      --------     ---------    --------
   Operating income/(loss)          3,968          3,968       (5,405)      (11,994)      (12,282)     18,357
   Interest expense                 1,415         14,162       13,971        15,533        12,747      13,070
   Other (income)/expense,
     net                            2,000          1,651          184        (1,812)        1,117      (1,348)
                                ---------       --------     --------      --------     ---------    ---------

   Income/(loss) from
     continuing operations
     before income taxes              553        (11,845)     (19,560)      (25,715)      (26,146)      6,635
   Income tax
     expense/(benefit)                  -              -            -       (10,015)       (9,347)      2,307
                                ---------       --------     --------      --------     ---------    --------
   Earnings/(loss) from
     continuing operations            553        (11,845)     (19,560)      (15,700)      (16,799)      4,328
   Discontinued operations:
   Income/(loss) from
     discontinued
     operations, net of tax             -              -            -             -          (637)      1,081
   Gain (loss) on disposal,
     net of tax                         -              -          371          (333)      (14,657)          -
                                ---------       --------     --------      --------     ---------    --------
   Net income /(loss)                 553       $(11,845)    $(19,189)     $(16,033)    $ (32,093)   $  5,409

   Preferred dividends and
     accretion                     (1,465)             -             -            -             -           -
                                ---------       --------      --------     --------     ---------    --------

   Net income (loss)
     applicable to common
     shareholders               $    (912)      $(11,845)    $(19,189)     $(16,033)    $ (32,093)   $  5,409
                                =========       ========     =========     ========     =========    ========

   Basic earnings/(loss) per
     common share               $   (0.01)      $  (0.76)    $  (1.23)        (1.03)        (2.06)       0.35
   Diluted earnings/(loss)
     per common share           $   (0.01)      $  (0.76)    $  (1.23)        (1.03)        (2.06)       0.33
   Weighted average shares
     outstanding                   62,273         15,568       15,568        15,560        15,581      15,519
   Diluted weighted average
     shares outstanding            62,273         15,568       15,568        15,560        15,581      16,461

   Other Data:
   EBITDA  (b)                  $  30,602       $ 30,602     $ 25,776     $  20,918     $  20,136    $ 48,108
   Depreciation                    21,378         21,378       25,541        26,998        26,432      24,074
   Amortization                     5,256          5,256        5,640         5,914         5,986       5,677
   Capital expenditures             9,142          9,142        7,684         9,851        14,967      24,520
   Ratio of earnings to
     fixed charges (c)               1.09              -             -            -             -        1.48

                                       5



   Balance Sheet Data:
   Working capital
     (deficiency)                $    476      $(116,718)    $(106,809)    $ (5,223)    $   3,070    $  5,225
   Total assets                   160,209        159,079       174,505      197,804       263,166     305,973
   Current portion of
     long-term debt                 5,097        120,053       109,528        7,810         7,717       5,118
   Total long-term debt less
     current portion               82,051              -             -      110,209       140,613     142,181
   Stockholders' equity            19,000         (9,654)        2,724       21,913        37,946      69,756




                                                                                   Three Months Ended
                                                                        ------------------------------------------
                                                                                             
                                                                         March 30,     March 30,      March 31,
                                                                            2002          2002          2001
                                                                         Pro Forma       Actual        Actual
------------------------------------------------------------------------------------------------------------------
                                                                     (in thousands, except ratio and share data)
Operating Data:
   Net sales                                                              $ 61,681      $ 61,681     $ 63,634
   Cost of sales and operating expenses                                     46,395        46,395       48,312
   Selling, general and administrative expenses                              7,160         7,160        7,005
   Depreciation and amortization                                             4,392         4,392        6,814
                                                                          --------      --------     --------

   Operating income/(loss)                                                   3,734         3,734        1,503
   Interest expense                                                           (665)       (3,885)      (3,227)
   Other (income)/expense, net                                                 511           734          575
                                                                          --------      --------     --------

   Income (loss) before income taxes                                         3,580           583       (1,149)
   Income taxes                                                              1,083             -            -
                                                                          --------      --------     --------
   Net income (loss)                                                         2,497           583       (1,149)
   Preferred dividends and accretions                                         (380)            -            -
                                                                          ---------     --------     --------
   Net income (loss) applicable to common shareholders                    $  2,117      $    583     $ (1,149)
                                                                          ========      ========     ========
   Basic loss per common share                                            $   0.03      $   0.04     $  (0.07)
   Diluted loss per common share                                          $   0.03      $   0.04     $  (0.07)
   Weighted average shares outstanding                                      62,273        15,568       15,568
   Diluted weighted average shares outstanding                              62,535        15,830       15,568

Other Data:
   EBITDA  (b)                                                            $  8,126      $  8,126     $  8,317
   Depreciation                                                              3,257         3,257        5,339
   Amortization                                                              1,135         1,135        1,475
   Capital expenditures                                                      3,622         3,622        1,532
   Ratio of earnings to fixed charges (c)                                      3.0          1.14            -
                                                                                                     --------

Balance Sheet Data:
   Working capital (deficiency)                                           $  4,545      $ (3,286)    $(104,074)
   Total assets                                                            154,158       154,456       166,981
   Current portion of long-term debt                                         3,646         5,120       109,018
   Total long-term debt less current portion                                76,328       112,127             -
   Stockholders' equity (deficit)                                           26,642        (9,071)        1,266



(a)  The fiscal years ended  December 29,  2001,  December 30, 2000,  January 1,
     2000 and January 2, 1999 each consisted of 52 weeks.  The fiscal year ended
     January 3, 1998 consisted of 53 weeks.

(b)  "EBITDA"  represents,  for  any  relevant  period,  operating  profit  plus
     depreciation and amortization and impairment of long-lived  assets.  EBITDA
     is presented  here not as a measure of operating  results,  but rather as a
     measure of the Company's  debt service  ability and is not intended to be a
     presentation in accordance with generally accepted accounting principles.

(c)  For  purposes  of  calculating  the  ratio of  earnings  to fixed  charges,
     earnings consist of income (loss) from continuing  operations before income
     taxes and  fixed  charges.  Fixed  charges  consist  of  interest  expense,
     amortization  of debt issuance costs and one-third of rental expense deemed
     to be the  equivalent of interest.  For the years ended  December 29, 2001,
     December 30, 2000,  January 1, 2000 and January 2, 1999 (all  actual),  and
     three months ended March 31, 2001 (actual)  earnings were  insufficient  to
     cover fixed charges by $11.8  million  (actual),  $19.6  million  (actual),
     $25.7 million (actual),  $26.1 million (actual),  and $1.1 million (actual)
     respectively.



                                       6



                                           Ratio of Earnings to Fixed Charges
                                                     (in thousands)


                                                                  Fiscal Year Ended
                                 -------------------------------------------------------------------------------------
                                                                                        

                                 December 29,   December 29,   December 30,    January 1,    January 2,   January 3,
                                     2001           2001           2000           2000          1999         1998
                                   Pro Forma       Actual         Actual         Actual        Actual       Actual
----------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing
operations before income taxes      $  553        $(11,845)      $(19,560)      $(25,715)     $(26,146)       $6,635
Fixed charges:
   Interest expense                  1,415          14,162         13,971         15,533        12,747        13,070
   Amortization of debt
     issuance costs                    978             629          1,258          1,590           436           388
   Estimated interest within
     rental expense                  1,400           1,400          1,009            810           565           428
   Preference security
     dividend requirements           2,254               -              -              -             -              -
                                  --------       ----------     ----------   -----------      --------       --------

Earnings (loss)                   $  6,600       $  (4,346)     $  (3,322)    $   (7,782)     $(12,398)      $20,521
                                  ========       ==========     ==========    ==========      ========       =======
Fixed charges:
   Interest expense                 $1,415         $14,162        $13,971        $15,533       $12,747       $13,070

   Amortization of debt
     issuance costs                    978             629          1,258          1,590           436           388
   Estimated interest within
     rental expense                  1,400           1,400          1,009            810           565           428
   Preference security
     dividend requirements           2,254               -              -              -             -             -
                                  --------        --------      ---------     ----------      --------       --------
Fixed charges                     $  6,047         $16,191       $ 16,238     $   17,933      $ 13,748       $ 13,886
                                  ========         =======       ========     ==========      ========       ========

Ratio of earnings to fixed
charges                               1.09               -              -              -              -          1.48
Deficiency in earnings to
   cover fixed charges                   -         $11,845       $ 19,560       $ 25,715      $ 26,146              -
                                                   =======       ========       ========      ========       ========




                                                                                 Three Months Ended
                                                                      -----------------------------------------
                                                                                          
                                                                       March 30,     March 30,     March 31,
                                                                          2002          2002          2001
                                                                       Pro Forma       Actual        Actual
---------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes           $   3,580     $     583     $  (1,149)
Fixed charges:
   Interest expense                                                          665         3,885         3,227
   Amortization of debt issuance costs                                       223             -           315
   Estimated interest within rental expense                                  317           317           336
   Preference security dividend requirements                                 585             -             -
                                                                       ---------     ---------     ---------

Earnings (loss)                                                        $   5,370     $   4,785     $   2,729
                                                                       =========     =========     =========
Fixed charges:
   Interest expense                                                    $     665     $   3,885     $   3,227
   Amortization of debt issuance costs                                       223             -           315
   Estimated interest within rental expense                                  317           317           336
   Preference security dividend requirements                                 585             -             -
                                                                       ---------     ---------     ---------
Fixed charges                                                          $   1,790     $   4,202     $   3,878
                                                                       =========     =========     =========
Ratio of earnings to fixed charges                                           3.0          1.14             -
Deficiency in earnings to cover fixed charges                                  -             -     $   1,149
                                                                                                   =========



                                       7



                                  RISK FACTORS

     We urge you to consider  carefully all of the information set forth in this
prospectus and  incorporated  by reference in this  prospectus.  Please refer to
"Where You Can Find More Information." We urge you to particularly  evaluate the
following  risks  before  deciding to purchase  our common stock or our Series A
Preferred Stock.  Various  statements in this prospectus  (including some of the
following risk factors) constitute forward-looking  statements.  Please refer to
the section entitled "Forward-Looking Statements."

Fluctuations in market prices of finished  products--our  profitability and cash
flow may be reduced by decreases in the market price of our products.

     Our finished  products are  commodities,  the prices of which are quoted on
established commodity markets.  Accordingly,  our profitability will be affected
by fluctuations  in the prevailing  market prices of such finished  products.  A
significant  decrease in the market price of our products  would have a material
adverse effect on our profitability and cash flow.

Substantial  leverage  and  debt  service--we  have  substantial  debt  and have
significant  interest  payment  requirements  which could  adversely  affect our
ability to operate our business and fulfill our  obligations  under the Series A
Preferred Stock.

     We have a significant amount of indebtedness.  Our substantial indebtedness
could have important  consequences to the holders of our common stock and Series
A Preferred Stock including the risks that:

     o   we will be required to use a substantial  portion of our cash flow from
         operations to pay our  indebtedness,  thereby reducing the availability
         of our cash flow to fund the  implementation of our business  strategy,
         working capital, capital expenditures,  product development efforts and
         other general corporate purposes;

     o   our  interest  expense  could  increase  if  interest  rates in general
         increase  because  all of our debt will bear  interest  based on market
         rates;

     o   our level of indebtedness  will increase our  vulnerability  to general
         adverse economic and industry conditions;

     o   our debt service  obligations  could limit our  flexibility in planning
         for, or reacting to, changes in our business;

     o   our level of  indebtedness  may place us at a competitive  disadvantage
         compared to our competitors that have less debt;

     o   our  level of  indebtedness  may  prevent  us from  raising  the  funds
         necessary  to  redeem  all of the  Series A  Preferred  Stock  upon the
         occurrence of a change of control or sale of all or  substantially  all
         of  our   assets   as   described   under   "Description   of   Capital
         Stock--Preferred Stock--Series A Preferred Stock;" and

     o   our  failure  to  comply  with  the  financial  and  other  restrictive
         covenants in the agreements  governing our indebtedness,  which,  among
         other  things,  may limit our  ability to borrow  additional  funds and
         could  result in an event of  default,  could have a  material  adverse
         effect on us.

     As of May 21, 2002, we owed $61.0 million in senior  secured term loans and
$0.4 million in senior secured revolving loans under our senior credit agreement
described under "Description of Senior Credit Agreement." As of such date, three
letters  of credit in the face  amounts  of  $750,000,  $2.35  million  and $7.2
million,  respectively  were  issued and  outstanding  under the  senior  credit
facility.  We will  be able to  incur  additional  indebtedness  in the  future,
including $17.3 million of additional debt available under our revolving  credit
facility.  Additional  indebtedness will increase the risks described above. All
borrowings under our senior credit agreement,  will be secured and senior to the
Series A Preferred Stock and common stock.

     We cannot  assure the  holders of the common  stock and Series A  Preferred
Stock that our business will generate  sufficient cash flow from operations,  or
that future  borrowings will be available to us and our  subsidiaries  under the
revolving  credit  facility,  in an  amount  sufficient  to enable us to pay our
indebtedness, including the Series

                                       8


A Preferred  Stock, or to fund our other  liquidity  needs. If we cannot service
our indebtedness, we will be forced to take actions such as:

     o   delaying or  reducing  the  implementation  of our  business  strategy,
         capital expenditures or product development efforts;

     o   selling assets;

     o   restructuring or refinancing our indebtedness; or

     o   seeking additional equity capital.

     We cannot  assure the  holders of the common  stock and Series A  Preferred
Stock that any of these  remedies  can be  effected on  commercially  reasonable
terms or at all. In addition,  the terms of existing or future debt  agreements,
including the our senior credit agreement,  may restrict us from adopting any of
these alternatives. If we cannot service our indebtedness and these alternatives
are not available to us, we could be forced to seek bankruptcy protection.

     For  risks   associated  with  the   restrictive   covenants  in  our  debt
instruments, see "--Restrictive covenants in our debt instruments."

History of net  losses--we  have a history of net losses and we may  continue to
incur net  losses,  which  could  adversely  affect our  ability to service  our
indebtedness.

     We have a history  of net  losses  and have not been  profitable  in recent
years and may not be profitable in the future.  We reported a net profit of $0.6
million for the three months ended March 30, 2002. However,  for the years ended
December 29, 2001,  December 30, 2000,  January 1, 2000 and January 2, 1999, our
net losses were approximately $11.8 millions,  $19.2 million,  $16.0 million and
$32.1 million,  respectively.  If we incur net losses in the future, our ability
to pay principal and interest on our indebtedness could be adversely affected.

     In order to prosper,  we must materially  improve our performance in one or
more of the following:

     o   marketing and selling our products and services at volumes above recent
         levels;

     o   expanding our service charges;

     o   increasing gross margins;

     o   expanding  our  existing  businesses  through  acquisitions  which meet
         stringent financial tests;

     o   maintaining our distribution capability;

     o   maintaining competitiveness in pricing;

     o   continuing to manage our operating expenses; and

     o   reducing our indebtedness.

     There can be no assurance  that we will achieve these  objectives or attain
consistent profitability.

Limitation   on  net   operating   loss   carryforwards--as  a  result   of  the
Recapitalization,  our ability to apply federal  income tax net  operating  loss
carryforwards may be limited.

     As a result of the Recapitalization,  our ability to use federal income tax
net operating  loss  carryforwards  to offset future  taxable income that may be
generated  will be  limited.  In  particular,  we have  undergone  a  change  in
ownership under Section 382 of the Code as a result of the Recapitalization.  By
virtue of such a change in ownership,  an annual limitation  (generally equal to
the pre-change value of our stock multiplied by the adjusted federal  tax-exempt
rate,  which is set monthly by the IRS based on  prevailing  interest  rates and
equal to 4.89% for June 2002) will be applied to the use of those net  operating
loss carryforwards against future taxable income.

Restrictive  covenants  in our  debt  instruments--restrictions  imposed  by our
senior credit  agreement,  and future debt  agreements may, limit our ability to
make  payments on the Series A Preferred  Stock,  finance  future  operations or
capital  needs  or  engage  in  other  business  activities  that  may be in our
interest.

     Our senior credit agreement will, and future debt agreements may,  restrict
our ability to:

     o   incur additional indebtedness;

     o   issue additional capital stock or preferred stock;

     o   pay dividends and make other distributions;

     o   prepay subordinated debt;
                                       9


     o   make restricted payments;

     o   create liens;

     o   merge, consolidate or acquire other businesses;

     o   sell and otherwise dispose of assets; and

     o   enter into transactions with affiliates.

     These  terms may impose  restrictions  on our  ability  to  finance  future
operations, implement our business strategy, fund our capital needs or engage in
other business activities that may be in our interest.  In addition,  our senior
credit  agreement  will,  and future  indebtedness  may,  require us to maintain
compliance  with  specified  financial  ratios.  Although  we are  currently  in
compliance with the financial ratios and do not plan on engaging in transactions
that may cause us to not be in compliance with the ratios, our ability to comply
with these ratios may be affected by events  beyond our control,  including  the
risks described in the other risk factors.

     A breach of any of these  restrictive  covenants or our inability to comply
with the required  financial  ratios could result in a default  under the senior
credit  agreement.  In the event of a default under the senior credit agreement,
the lenders under the senior credit agreement may elect to:

     o   declare all  borrowings  outstanding,  together with accrued and unpaid
         interest and other fees, to be immediately due and payable; or

     o   require  us  to  apply  all  of  our  available  cash  to  repay  these
         borrowings.

     The lenders  will also have the right in these  circumstances  to terminate
any  commitments  they have to provide  further  financing,  including under the
revolving credit facility.

     If we are unable to repay these  borrowings when due, the lenders under the
senior  credit  agreement  also  will  have the  right to  proceed  against  the
collateral,  which consists of substantially all of our assets and the assets of
each of our direct and indirect domestic subsidiaries. If the indebtedness under
the senior credit agreement were to be accelerated, it is likely that our assets
may be  insufficient  to repay this  indebtedness  in full.  Any  future  credit
agreement or other agreement  relating to our indebtedness to which we or any of
our  subsidiaries  may  become a party  or under  which we are or any one of our
subsidiaries  is or may become a guarantor may include the  covenants  described
above  and other  restrictive  covenants.  See  "Description  of  Senior  Credit
Agreement."

Ranking of the Series A Preferred Stock and common  stock--upon any distribution
to our  creditors in a  bankruptcy,  liquidation  or  reorganization  or similar
proceeding relating to our company or our property, the holders of our debt will
be entitled  to be paid in cash  before any payment may be made with  respect to
the Series A Preferred Stock and common stock.

     Our  obligations   with  respect  to  the  Series  A  Preferred  Stock  are
subordinate  and  junior  in right of  payment  to all our  present  and  future
indebtedness, including indebtedness under our senior credit agreement, but will
rank senior to our common stock. In the event of our bankruptcy,  liquidation or
reorganization,  our assets will be available to pay obligations on the Series A
Preferred  Stock  and then the  common  stock  only  after  all  holders  of our
indebtedness  and all our other  creditors  have been paid. As a result,  in the
event of our liquidation or bankruptcy it is likely that there will be no assets
available  for  distribution  to our  equity  holders  and  thus no value to our
equity.

     While any shares of the Series A Preferred Stock are  outstanding,  without
the  written  consent  of 66 2/3% of the  outstanding  shares  of the  Series  A
Preferred Stock, we may not create, authorize, issue or reclassify

     o   any class of stock  ranking  prior or equal to the  Series A  Preferred
         Stock  with  respect to  dividends  or upon  liquidation,  dissolution,
         winding up or otherwise; or

     o   any security that is convertible or exchangeable into such stock.

Dividends--our  ability to pay any dividends on the Series A Preferred Stock and
common stock may be limited.


                                       10


     We cannot  assure the holders of the Series A Preferred  Stock that we will
be able to pay dividends on the Series A Preferred  Stock. In addition,  we have
not declared or paid cash  dividends on our common stock since  January 3, 1989.
The payment of any  dividends by us on our common stock in the future will be at
the  discretion  of our Board of  Directors  and will depend  upon,  among other
things, future earnings, operations, capital requirements, our general financial
condition,  the general  financial  condition  of our  subsidiaries  and general
business conditions.

     Our ability to pay any cash or noncash  dividends on the Series A Preferred
Stock and common stock is subject to  applicable  provisions of state law and to
the  terms of our  senior  credit  agreement.  The  terms of our  senior  credit
agreement  prohibit us from paying any cash  dividends on the Series A Preferred
Stock and the common stock so long as any  indebtedness  or  commitments  remain
outstanding under our senior credit agreement.  Moreover, under Delaware law, we
are  permitted  to pay  cash or  accumulated  dividends  on our  capital  stock,
including the Series A Preferred Stock and common stock, only out of surplus, or
if there is no  surplus,  out of our net  profits for the fiscal year in which a
dividend is declared or for the immediately  preceding  fiscal year.  Surplus is
defined  as the excess of a  company's  total  assets  over the sum of its total
liabilities plus the par value of its outstanding capital stock. In order to pay
dividends,  we must have surplus or net profits  equal to the full amount of the
dividends at the time such dividend is declared.  In determining  our ability to
pay dividends, Delaware law permits our Board of Directors to revalue our assets
and  liabilities  from  time to time to their  fair  market  values  in order to
establish the amount of surplus.  We cannot predict what the value of our assets
or the amount of our  liabilities  will be in the future  and,  accordingly,  we
cannot  assure the holders of the Series A Preferred  Stock and the common stock
that we will be able to pay  dividends  on the Series A Preferred  Stock and the
common stock.

Inability to redeem the Series A Preferred Stock prior to or at maturity--we may
not have  sufficient  funds to make a change of control or sale of assets  offer
when  required  by the  certificate  of  designation  relating  to the  Series A
Preferred Stock because of prohibitions in our senior credit agreement.

     In the  event  that we  experience  a  change  of  control  or sell  all or
substantially  all of our assets,  we cannot  assure the holders of the Series A
Preferred  Stock  that we would  have  sufficient  funds to  satisfy  all of our
obligations under the senior credit agreement and the Series A Preferred Stock.

     If we  experience a change of control or sell all or  substantially  all of
our assets,  to the extent we have legally  available funds for the payment,  we
must offer to redeem all shares of Series A Preferred Stock then  outstanding in
cash.  However,  we are prohibited by the senior credit agreement from redeeming
any  shares  of our  Series A  Preferred  Stock so long as any  indebtedness  or
commitments  remain  outstanding under the senior credit  agreement.  The senior
credit  agreement  also provides  that a change of control  event  constitutes a
default under the senior credit  agreement.  See  "Description  of Senior Credit
Agreement."  We may also become a party to, or guarantor  under,  future  credit
agreements  or other  agreements  relating to senior  indebtedness  that contain
similar restrictions or provisions.

     If we  experience a change of control or sell all or  substantially  all of
our assets when we are prohibited  from redeeming the Series A Preferred  Stock,
we could seek the consent of the lenders  under the senior  credit  agreement to
redeem the Series A Preferred Stock or could attempt to refinance the borrowings
that  contain  the  prohibition.  If we do not  obtain  the  consent  and do not
refinance the borrowings, we would remain prohibited from redeeming the Series A
Preferred  Stock.  This could have  adverse  consequences  to the holders of the
Series A Preferred  Stock as well as us. If a default occurs with respect to any
senior  indebtedness,   the  subordination  provisions  of  the  certificate  of
designation  relating to the Series A Preferred Stock would restrict payments to
the holders of the Series A Preferred Stock.

There is no prior  market for the Series A  Preferred  Stock and  holders of the
Series A Preferred  Stock cannot be assured that an active  trading  market will
develop for the Series A Preferred  Stock.  If an active  trading market for the
Series A Preferred Stock does not develop, the liquidity and value of the Series
A Preferred Stock could be harmed.

     The shares of Series A Preferred  Stock are new  securities for which there
is currently no trading  market.  If an active  trading  market for the Series A
Preferred  Stock  does not  develop,  the  liquidity  and value of the  Series A
Preferred  Stock  could be harmed.  We do not intend to apply for listing of the
Series A Preferred  Stock on any securities  exchange or  interdealer  quotation
system.


                                       11


Material tax  considerations  for the Series A Preferred  Stock--holders  of the
Series A  Preferred  Stock  will have to  recognize  income in  advance of their
receipt of the cash attributable to this income.

     Section 305(c) of the Internal Revenue Code provides that the entire amount
of a  redemption  premium  with  respect to  preferred  stock that is subject to
mandatory  redemption (such as the Series A Preferred Stock) is treated as being
distributed to the holders of such preferred stock on an economic  accrual basis
over  the  period  the  stock  is  outstanding  notwithstanding  that  the  cash
attributable to the redemption  premium will not be received by the holder until
a  subsequent  period.  Preferred  stock  generally  is  considered  to  have  a
redemption  premium  for this  purpose if the price at which it must be redeemed
exceeds its issue price by more than a de minimis amount. The Series A Preferred
Stock provides for cumulative  preferred  dividends.  Thus, the redemption price
will  depend  on  whether  dividends  on such  stock  are  paid  currently.  The
legislative  history of section 305(c) states that if at the time of issuance of
cumulative  preferred  stock there is "no  intention"  for  dividends to be paid
currently,  the IRS may treat such dividends as a disguised  redemption premium.
Under  that  approach,  the  excess  of the  redemption  price  of the  Series A
Preferred  Stock  (including  any disguised  redemption  premium) over its issue
price is taxable as  constructive  distributions  to the  holder  (treated  as a
dividend to the extent of our  company's  current and  accumulated  earnings and
profits)  over the term of the  preferred  stock using a constant  interest rate
method similar to that for accruing  original issue  discount.  To date, the IRS
has  not  promulgated  such  regulations,   although  the  issue  remains  under
consideration.  In the current situation, we intend to take the position that we
do not have "no  intention"  to pay  dividends  currently  (although  our senior
credit  agreement  prohibits  us  from  paying  any  cash  dividends  while  any
indebtedness  remains outstanding under such agreement) and thus that holders of
the Series A Preferred  Stock  should not be required to treat any excess of the
final  redemption  price  over  the  issue  price as a  series  of  constructive
distributions  over the  period  such stock is  outstanding.  This issue is not,
however,  free from  doubt.  Holders  of Series A  Preferred  Stock are urged to
consult  their tax  advisors  with  respect to this issue.  For a more  detailed
discussion of the U.S.  Federal  income tax  consequences  to the holders of the
Series A  Preferred  Stock of the  ownership  and  disposition  of the  Series A
Preferred Stock, see "Material U.S. Federal Tax Considerations."

Additional Issuance of Shares--we may issue additional common stock or preferred
stock, which could dilute your interests.

     Our certificate of incorporation, as amended does not limit the issuance of
additional  common stock or additional  series of preferred stock ranking junior
to the  Series A  Preferred  Stock.  As of May 22,  2002 we have  available  for
issuance  37,726,532  authorized but unissued shares of common stock and 900,000
authorized  but  unissued  shares  of  preferred  stock  that may be  issued  in
additional  series.  We may not,  without  the  approval  of 66 2/3% of the then
outstanding  Series A  Preferred  Stock,  issue any  securities  senior to or on
parity  with  the  Series  A  Preferred  Stock.  None of the  provisions  of the
certificate of designation  relating to the Series A Preferred Stock affords the
holders  of the Series A  Preferred  Stock  protection  in the event of a highly
leveraged or other transactions that might adversely affect their interests.

Volatility  of Share  Price--the  market  price of our common stock and Series A
Preferred Stock could be volatile.

     The market price of our common stock has been subject to volatility and, in
the future,  the market price of our common  stock and Series A Preferred  Stock
could fluctuate widely in response to numerous factors, many of which are beyond
our control.  These factors include,  among other things,  actual or anticipated
variations  in our  operating  results,  earnings  releases  by us,  changes  in
financial estimates by securities analysts,  sales of substantial amounts of our
common  stock or Series A  Preferred  Stock  pursuant to this  offering,  market
conditions  in the industry  and the general  state of the  securities  markets,
governmental legislation or regulation, currency and exchange rate fluctuations,
as well as general economic and market conditions, such as recessions.

Key Personnel--Our success is dependent on our key personnel.

     Our success depends to a significant extent upon a number of key employees,
including members of senior management.  The loss of the services of one or more
of these key employees could have a material  adverse effect on our business and
prospects. We believe that our future success will depend in part on our ability
to attract,  motivate and retain skilled  technical,  managerial,  marketing and
sales  personnel.  Competition for such personnel is intense and there can be no
assurance that we will be successful in attracting, motivating and retaining key
personnel.  The  failure  to hire and retain  such  personnel  could  materially
adversely affect our business and results of operations.

                                       12



Competition--the  most competitive  aspect of our business is the procurement of
raw materials.

     Our management believes that the most competitive aspect of our business is
the  procurement  of raw  materials  rather than the sale of finished  products.
During the last ten plus years, pronounced consolidation within the meat packing
industry has resulted in bigger and more efficient slaughtering operations,  the
majority of which utilize "captive"  processors.  Simultaneously,  the number of
small meat packers,  which have  historically been a dependable source of supply
for non-captive processors,  such as us, has decreased  significantly.  Although
the total amount of slaughtering may be flat or only moderately increasing,  the
availability, quantity and quality of raw materials available to the independent
processors  from these sources have all decreased.  Major  competitors  include:
Baker Commodities in the West; National  By-Products in the Midwest; and Griffin
Industries in Texas and the Southeast.  Each of these businesses compete in both
the Rendering and Restaurant  Service  segments.  A significant  decrease in raw
materials  available  could  materially  and  adversely  affect our business and
results of operations.

     The rendering and  restaurant  services  industry is highly  fragmented and
very  competitive.  We compete  with other  rendering  and  restaurant  services
businesses and alternative methods of disposal of animal processing  by-products
and used restaurant  cooking oil provided by trash haulers and waste  management
companies,  as  well  as the  alternative  of  illegal  disposal.  We  charge  a
collection  fee to offset a  portion  of the cost  incurred  in  collecting  raw
material.  In recent years we have become highly dependent upon these collection
fees.  To the extent  suppliers of raw  materials  look to alternate  methods of
disposal,  whether as a result of our collection fees being deemed too expensive
or  otherwise,  our raw material  supply will  decrease and our  collection  fee
revenues will decrease, which could materially and adversely affect our business
and results of operations.

Government   regulations  and   approvals--we   may  incur  material  costs  and
liabilities in complying with government regulations.

     We are subject to the rules and regulations of various  federal,  state and
local governmental  agencies.  Material rules and regulations and the applicable
agencies are:

     o   the Food and Drug  Administration  (FDA), which regulates food and feed
         safety;

     o   the United States  Department of Agriculture  (USDA),  which  regulates
         collection and production methods;

     o   the  Environmental  Protection  Agency (EPA),  which  regulates air and
         water  discharge  requirements,  as well as local  and  state  agencies
         governing air and water discharge;

     o   state  Departments of  Agriculture,  which regulate  animal  by-product
         collection and transportation procedures and animal feed quality; and

     o   the United States  Department  of  Transportation  (USDOT),  as well as
         local  and  state  agencies,   which  regulate  the  operation  of  our
         commercial vehicles.

     Such rules and  regulations  may influence our operating  results at one or
more facilities. There can be no assurance that we will not incur material costs
and liabilities in connection with such regulations.

Ownership of our company--our  lenders have the ability to exercise  significant
control  over all  major  corporate  transactions  and may have  interests  that
conflict with the interests of the other holders of the Series A Preferred Stock
and common stock.

     Our lenders, through their beneficial ownership of our common stock, in the
aggregate own 75% of our voting equity. If they act in concert, the lenders have
effective  control of us by virtue of their ability to elect the majority of our
directors,  to approve any action  requiring  the approval of our  stockholders,
including  amendments  to  our  charter  documents,  and to  effect  fundamental
corporate  transactions  such as mergers and asset sales.  The  interests of the
Lenders as  stockholders  may differ from the  interests of the other holders of
the Series A Preferred Stock and common stock, thus the lenders may take actions
that may disadvantage  our other  stockholders.  We have been advised,  however,
that  the  lenders  do not  have  and do  not  expect  to  have  any  contracts,
arrangements or  understandings to vote as a group for the election of directors
or on any other  issue or to hold or dispose of thier  common  stock or Series A
Preferred Stock.

                                       13



We are highly dependent on natural gas.

     Our operations  are highly  dependent on the use of natural gas. A material
increase in natural gas prices over a sustained  period of time could materially
adversely affect our business, financial condition and results of operations.

Certain  of  our  26  operating  facilities  are  highly  dependent  upon  a few
suppliers.

     Certain of our 26 operating facilities are highly dependent on one or a few
suppliers.  Should any of these suppliers choose alternate  methods of disposal,
cease their  operations,  have their  operations  interrupted  by  casualty,  or
otherwise cease using our collection  services,  such operating facilities would
be materially and adversely affected.

In certain markets we are highly dependent upon the continued and  uninterrupted
operation of a single operating facility.

     In the majority of our markets,  in the event of a casualty or condemnation
involving a facility located in such market, we would utilize a nearby operating
facility to continue to serve our customers in such market.  In certain markets,
however,  we do not  have  alternate  operating  facilities.  In the  event of a
casualty or condemnation,  we would experience an interruption in our ability to
service our customers and to procure raw  materials.  This would  materially and
adversely  affect our business and results of  operations  in such  markets.  In
addition,  after an operating facility affected by a casualty or condemnation is
restored,  there could be no assurance  that customers who in the interim choose
to use alternative disposal services would return to use our services.

Bovine spongiform encephalopathy (BSE) or "mad cow disease."

     Effective  August,  1997, the FDA promulgated a rule prohibiting the use of
mammalian proteins,  with some exceptions,  in feeds for cattle, sheep and other
ruminant  animals.  The  intent of this rule is to  prevent  the  spread of BSE,
commonly  referred to as "mad cow disease," should the disease ever occur in the
United  States.  Our  management  believes  that we are in  compliance  with the
provisions of the rule.

     The European fear of "mad cow disease" could adversely impact acceptance of
our finished  products in Europe.  To date,  the "mad cow disease"  situation in
Europe and new FDA  restrictions,  coupled with much lower prices for  competing
commodities,  has caused lower prices for some of our key products.  If "mad cow
disease" were to spread to the United States, this could have a material adverse
affect on our business and results of operations.

Events such as those of September 11, 2001 may adversely  affect our  operations
or the markets for our securities.

     Following  the  September  11,  2001  terrorist  attacks,  there  has  been
substantial  volatility  in  the  U.S.,  Canadian  and  international  financial
markets.  Continued  military  or other  response  by the  United  States or its
allies,  future  terrorist  attacks or the  anticipation  of any such actions or
events may have adverse  impacts on the U.S. and world economies and may disrupt
financial markets  (including payment systems and  clearinghouses)  for extended
periods of time.  These armed  conflicts or attacks may also directly impact our
physical  facilities  or those of our  suppliers or customers  and could have an
impact  on our  domestic  and  international  sales,  supply  chain,  production
capability and ability to deliver our products to our customers.

     Political  and economic  instability  in some regions of the world may also
result and could negatively impact our business and financial  condition and our
expectations as described in  forward-looking  statements.  The foregoing events
may adversely affect the trading price of our common shares.




                                       14



                                RECAPITALIZATION

The Recapitalization Transactions

     On May 13, 2002,  we  consummated  a  comprehensive  recapitalization  plan
designed to provide us with sufficient  financing to implement our business plan
and improve our debt and capital  structure.  The  principal  components  of the
Recapitalization consisted of:

     o   the issuance to the lenders of 46,705,086  shares of common stock, such
         that the lenders collectively own 75% our issued and outstanding common
         stock and 100,000 shares of 6% cumulative redeemable Series A Preferred
         Stock with a  liquidation  preference of $100 per share in exchange for
         the  cancellation  of an aggregate of  approximately  $64.6  million of
         indebtedness  owed by us,  comprised  of (i)  $55.4  million  principal
         amount of loans under our previous credit agreement,  (ii) $5.3 million
         of accrued  and unpaid  interest  and  commitment  fees owing under our
         previous credit  agreement and (iii) the $3,855,000  forbearance fee we
         owed to the lenders under the forbearance agreement then existing;

     o   a new amended  and  restated  credit  agreement  with the lenders  that
         provides for a $61.0 million term loan and a revolving  credit facility
         of $17.3 million for working  capital loans and letters of credit.  The
         term loan and the revolving credit facility mature on May 10, 2007. See
         "Description of the Senior Credit Agreement";

     o   the  reduction of our  indebtedness  to the lenders from  approximately
         $126.9  million to $61.0 million  principal  amount plus  approximately
         $1.3 million of accrued interest;

     o   the  reduction in the size of our Board of  Directors  from six to five
         members and the nomination  for election of the three  designees of the
         lenders and two existing  directors to our Board of Directors until our
         2003 annual meeting of stockholders;

     o   our granting certain preemptive rights to the lenders; and

     o   our filing this registration statement with the Securities and Exchange
         Commission.  (We also granted the lenders  certain  other  registration
         rights relating to such shares).





                                       15



                                USE OF PROCEEDS

     The selling  stockholders  will receive all of the proceeds from the resale
of the  securities  offered  hereby.  We will not receive any proceeds  from the
resale of such securities.

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is quoted and traded on the American  Stock Exchange under
the symbol "DAR." The table below presents,  for the fiscal quarters  indicated,
the high and low closing sales prices per share for each such fiscal quarter.



                                                                                  
                              2002                   2001                    2000                   1999
Fiscal Quarter          High        Low         High        Low        High       Low          High        Low
--------------          ----        ---         ----        ---        ----       ---          ----        ---
First Quarter           $0.85       $0.32       $1.250     $0.438     $2.000     $1.625       $3.500      $1.750
Second Quarter                                   0.840      0.500      1.750      1.125        2.125       1.500
Third Quarter                                    1.000      0.500      1.375      0.250        2.000       1.063
Fourth Quarter                                   0.910      0.500      0.875      0.250        3.000       0.875



     There  were 90  shareholders  of record of the  common  stock as of May 22,
2002.  As of May 21, 2002,  the closing  price per share of our common stock was
$0.85 as quoted on the American Stock Exchange.

                                DIVIDEND POLICY

     We have not  declared  or paid any  dividends  on our  common  stock  since
January 3, 1989. We do not  anticipate  paying any cash  dividends on our common
stock  in the  foreseeable  future.  In  addition,  our  financing  arrangements
prohibit us from paying cash  dividends on our common  stock in the  foreseeable
future.  We currently intend to retain future  earnings,  if any, for use in the
operation of our business, to reduce our indebtedness and to fund future growth.
Any future  determination  to pay cash  dividends on our common stock will be at
the  discretion  of our Board of Directors  and will be based upon our financial
condition,  operating  results,  capital  requirements,   plans  for  expansion,
restrictions  imposed by any financing  arrangements  and any other factors that
the Board of Directors feels are relevant.


                                       16



                                 CAPITALIZATION

     The  following  table sets forth the  capitalization  of our  company as of
March 30, 2002 on an actual basis and on a pro forma basis to give effect to the
issuance of  46,705,086  shares of our common  stock and  100,000  shares of our
Series A Preferred Stock in connection with the  recapitalization of our company
as described under "Recapitalization."



                                                                                   March 30, 2002
                                                                                   (in thousands)
                                                                    ---------------------------------------------

                                                                                         
                                                                            Actual             Pro Forma
                                                                    ----------------------- ---------------------
Cash and cash equivalents.......................................           $  2,999            $ 2,999
                                                                           ========            =======

 Current portion of long-term debt..............................           $  5,120            $ 3,646

 Long-term debt ................................................            112,127             76,328

 Series A 6% Cumulative Redeemable Preferred Stock, liquidation
 preference $10,000,000; none  (actual) and 100,000 (pro
 forma) shares issued and outstanding............................                 -              7,619

 Shareholders' Equity (Deficit):

     Preferred Stock, $0.01 par value per share; 1,000,000 shares
     authorized, none issued                                                      -                  -

     Common stock, $0.01 par value per share; 25,000,000 (actual)
     (pro forma) shares authorized; 15,589,362 (actual) and
     62,294,448 (pro forma) shares issued and outstanding ......                156                623

 Additional paid-in capital.....................................             35,235             70,481

 Treasury stock, at cost; 21,000 shares                                        (172)              (172)

 Accumulated comprehensive loss                                                (533)              (533)

 Accumulated deficit............................................            (43,757)           (43,757)
                                                                            --------           --------

 Total shareholders' equity (deficit)...........................             (9,071)            26,642
                                                                            --------            ------

       Total Capitalization.....................................           $108,176           $114,235
                                                                           ========           ========






                                       17



         SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

     The following selected historical and pro forma consolidated financial data
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition  and Results of  Operations"  and our audited  consolidated
financial  statements  and  related  notes  thereto and  unaudited  consolidated
financial  statements  and related  notes  thereto  included  elsewhere  in this
prospectus.  The selected pro forma data does not purport to represent  what our
results  would  have  been if the  Recapitalization  had  occurred  at the dates
indicated.  The Pro Forma columns  included in the Operating  Data for the three
months ended March 30, 2002 and the fiscal year ended December 29, 2001, derived
from elsewhere in this  prospectus,  reflect the effect of the  Recapitalization
had it occurred at the  beginning of such  periods.  The Pro Forma Balance Sheet
Data as of March 30, 2002 and December 29, 2001,  derived from elsewhere in this
prospectus,  reflect the effect of the Recapitalization as if it had occurred on
such dates.


                                                            Fiscal Year Ended (a)
                               --------------------------------------------------------------------------------
                                                                                    
                               December 29,    December 29,  December 30,  January 1,   January 2,    January 3,
                                   2001           2001          2000         2000         1999         1998
                                 Pro Forma       Actual        Actual       Actual       Actual       Actual
--------------------------------------------------------------------------------------------------------------
                                               (in thousands, except ratio and share data)
Operating Data:
   Net sales                     $255,974       $255,974      $242,795      $258,570     $337,031     $444,142
                                 --------       --------      --------      --------     --------     --------
   Cost of sales and
     operating expenses           196,778        196,778       190,283       210,879      283,822      362,787
   Selling, general and
     administrative expenses       28,594         28,594        26,736        26,773       33,073       33,247
   Depreciation and
     amortization                  26,634         26,634        31,181        32,912       32,418       29,751

   Operating income/(loss)          3,968          3,968        (5,405)      (11,994)     (12,282)      18,357
   Interest expense                 1,415         14,162        13,971        15,533       12,747       13,070
   Other (income)/expense, net      2,000          1,651           184        (1,812)       1,117       (1,348)
                                  -------          -----     ---------        ------        -----       ------

   Income/(loss) from
     continuing operations
     before income taxes              553        (11,845)      (19,560)      (25,715)     (26,146)       6,635
   Income tax expense/(benefit)         -              -             -       (10,015)      (9,347)       2,307
                                  -------          -----     ---------        ------        -----       ------
   Earnings/(loss) from
     continuing operations            553        (11,845)      (19,560)      (15,700)     (16,799)       4,328
   Discontinued operations:
   Income/(loss) from
     discontinued
     operations, net of tax             -              -             -             -         (637)       1,081

   Gain (loss) on disposal,
     net of tax                         -              -           371          (333)     (14,657)           -
                                  -------          -----     ---------        ------        -----       ------
   Net income /(loss)                 553        (11,845)      (19,189)      (16,033)     (32,093)       5,409

   Preferred dividends and
     accretion                     (1,465)             -             -            -             -            -
                                  -------          -----     ---------        ------        -----       ------

   Net income (loss)
     applicable to common
     shareholders                 $  (912)       (11,845)      (19,189)     $(16,033)    $(32,093)       5,409
                                  =======        =======      ========      ========      ========       =====

   Basic earnings/(loss) per
     common share                $  (0.01)         (0.76)        (1.23)        (1.03)       (2.06)        0.35

   Diluted earnings/(loss)
     per common share            $  (0.01)         (0.76)        (1.23)        (1.03)       (2.06)        0.33
   Weighted average shares
     outstanding                   62,273         15,568        15,568        15,568       15,581       15,519
   Diluted weighted average
     shares outstanding            62,273         15,568        15,568        15,568       15,581       16,461

   Other Data:
   EBITDA  (b)                   $ 30,602        $30,602       $25,776        20,918       20,136       48,108
   Depreciation                    21,378         21,378        25,541        26,998       26,432       24,074
   Amortization                     5,256          5,256         5,640         5,914        5,986        5,677
   Capital expenditures             9,142          9,142         7,684         9,851       14,967       24,520
   Ratio of earnings to
     fixed charges (c)               1.09              -             -             -            -         1.48


                                       18

   Balance Sheet Data:
   Working capital
     (deficiency)              $      476      $(116,718)    $(106,809)       (5,223)       3,070        5,225
   Total assets                   160,209        159,079       174,505       197,804      263,166      305,973
   Current portion of
     long-term debt                 5,097        120,053       109,528         7,810        7,717        5,118
   Total long-term debt less
     current portion               82,051              _             -       110,209      140,613      142,181
   Stockholders' equity
     (deficit)                     19,000         (9,654)        2,724        21,913       37,946       69,756



                                                                                Three Months Ended
                                                                     ------------------------------------------
                                                                                          
                                                                       March 30,     March 30,     March 31,
                                                                         2002           2002          2001
                                                                       Pro Forma       Actual        Actual
--------------------------------------------------------------------------------------------------------------
Operating Data:
   Net sales                                                             $61,681      $61,681      $ 63,634
   Cost of sales and operating expenses                                   46,395       46,395        48,312
   Selling, general and administrative expenses                            7,160        7,160         7,005
   Depreciation and amortization                                           4,392        4,392         6,814

   Operating income/(loss)                                                 3,734        3,734         1,503
   Interest expense                                                         (665)      (3,885)       (3,227)
   Other (income)/expense, net                                               511          734           575
                                                                         -------      -------       --------

   Income (loss) before income taxes                                       3,580          583        (1,149)
   Income taxes                                                            1,083            -             -
                                                                         -------      -------       --------

   Net income (loss)                                                       2,497          583        (1,149)

   Preferred dividends and accretion                                        (380)           -              -
                                                                         -------      -------       --------

   Net income (loss) applicable to common shareholders                   $ 2,117      $   583       $ (1,149)
                                                                         =======      =======       =========

   Basic income (loss) per common share                                  $  0.03      $  0.04       $  (0.07)

   Diluted income (loss)  per common share                               $  0.03      $  0.04       $  (0.07)

   Weighted average shares outstanding                                    62,273       15,568         15,568
   Diluted weighted average shares outstanding                            62,535       15,830         15,568

Other Data:
   EBITDA  (b)                                                             8,126        8,126       $  8,317
   Depreciation                                                            3,257        3,257          5,339
   Amortization                                                            1,135        1,135          1,475
   Capital expenditures                                                    3,622        3,622          1,582
   Ratio of earnings to fixed charges (c)                                    3.0         1.14              -


Balance Sheet Data:

   Working capital (deficiency)                                          $ 4,545      $(3,286)     $(104,074)
   Total assets                                                          154,158      154,456        166,981
   Current portion of long-term debt                                       3,646        5,120        109,018
   Total long-term debt less current portion                              76,328      112,127           -
   Stockholders' equity (deficit)                                         26,642       (9,071)         1,266



(a)  The fiscal years ended  December  29, 2001,  January 1, 2000 and January 2,
     1999 each  consisted  of 52 weeks.  The fiscal  year ended  January 3, 1998
     consisted of 53 weeks.

(b)  "EBITDA"  represents,  for  any  relevant  period,  operating  profit  plus
     depreciation and amortization and impairment of long-lived  assets.  EBITDA
     is presented  here not as a measure of operating  results,  but rather as a
     measure of the Company's  debt service  ability and is not intended to be a
     presentation in accordance with generally accepted accounting principles.

(c)  For  purposes  of  calculating  the  ratio of  earnings  to fixed  charges,
     earnings consist of income (loss) from continuing  operations before income
     taxes and  fixed  charges.  Fixed  charges  consist  of  interest  expense,
     amortization  of debt issuance costs and one-third of rental expense deemed
     to be the  equivalent of interest.  For the years ended  December 29, 2001,
     December 30, 2000,  January 1, 2000 and January 2, 1999 (all  actual),  and
     three months ended March 31, 2001 (actual)  earnings were  insufficient  to
     cover fixed charges $11.8 million (actual),  $19.6 million (actual),  $25.7
     million  (actual),  and $26.1 million  (actual) and $1.1 million  (actual),
     respectively.

                                       19


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following  Management's  Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve risks
and  uncertainties.  Our  actual  results  could  differ  materially  from those
anticipated in these forward-looking  statements as a result of certain factors,
including those set forth under the heading "Risk Factors" and elsewhere in this
prospectus.  The following  discussion  should be read in  conjunction  with our
consolidated  financial  statements and related notes thereto included elsewhere
in this prospectus.

General

     Darling is a  recycler  of food  processing  by-products.  We  collect  and
recycle  animal  processing  by-products  and used  restaurant  cooking  oil. In
addition, we provide grease trap collection services to restaurants.  We process
such raw materials at 26 facilities  located  throughout  the United States into
finished products such as tallow,  meat and bone meal and yellow grease. We sell
these products nationally and internationally, primarily to producers of various
industrial and commercial  oleo-chemicals,  soaps, pet foods and livestock feed,
for use as ingredients in their  products or for further  processing  into basic
chemical compounds.

Results of Operations

3 Months Ended March 30, 2002 vs. 3 Months Ended March 31, 2001

     General.  We recorded net income of $0.6 million for the three months ended
March 30, 2002  (first  quarter of Fiscal  2002),  as compared to a loss of $1.1
million for the three  months  ended  March 31,  2001  (first  quarter of Fiscal
2001),  an  improvement  of $1.7  million.  Principal  factors  affecting  these
comparative results,  which are discussed further in the following section, were
lower  depreciation  expense,   favorable  yields  on  production,   and  higher
collection fees which improved recovery of collection expenses, partially offset
by lower inage and finished product and hide prices.

     Net Sales.  We collect and processes  animal  by-products  (fat,  bones and
offal) and used restaurant  cooking oil to produce finished  products of tallow,
meat and bone meal,  and yellow  grease.  In  addition,  we provide  grease trap
collection services to restaurants. Sales are significantly affected by finished
goods  prices,  quality of raw material,  and volume of raw material.  Net sales
include the sales of produced finished goods, trap grease services, and finished
goods  purchased for resale,  which  constitute less than 10% of total sales for
both the first quarter of Fiscal 2002 and the first quarter of Fiscal 2001.

     During  the first  quarter  of Fiscal  2002,  net sales  decreased  by $1.9
million  (3.1%),  to $61.7 million as compared to $63.6 million during the first
quarter of Fiscal 2001  primarily due to the  following:  (1) raw material inage
decreased $2.1 million;  (2) lower aggregate finished goods prices resulted in a
$2.1 million decrease (our average yellow grease prices  increased  $0.48/cwt to
$9.36/cwt (5.4% higher);  average tallow prices increased $0.30/cwt to $9.70/cwt
(3.2%  higher);  and average meat and bone meal prices  decreased  $16.20/ton to
$181.60/ton  (8.2%  lower));  (3) lower hides  prices  decreased  net sales $0.7
million;  (4) finished goods  purchased for resale  decreased $0.6 million;  (5)
other changes  decreased $0.1 million;  partially offset by (6) higher yields on
production of $2.3  million;  and (7) higher  collection  fees,  which  improved
recovery of collection expenses, by $1.4 million.

     Cost of Sales and Operating Expenses.  Cost of sales and operating expenses
include prices paid to raw material suppliers, the cost of product purchased for
resale, and the cost to collect and process raw material.  We utilize both fixed
and formula pricing methods for the purchase of raw materials.  Fixed prices are
adjusted  where possible as needed for changes in  competition  and  significant
changes in finished goods market conditions, while raw materials purchased under
formula prices are correlated with specific finished goods prices.

     During  the first  quarter  of  Fiscal  2002,  cost of sales and  operating
expenses  decreased  $1.9 million  (3.9%) to $46.4  million as compared to $48.3
million  during the first  quarter of Fiscal 2001  primarily  as a result of the
following:  (1) lower  natural gas and fuel oil factory  expenses  resulted in a
decrease  of $1.5  million  in cost of  sales;  (2) lower  raw  material  prices
resulted  in a decrease  of $0.6  million in cost of sales;  (3) lower  finished
goods purchased for resale  decreased cost of sales $0.6 million;  (4) lower raw
material  inage  decreased cost of sales $0.4 million;  partially  offset by (5)
higher  collection  and factory  payroll  expenses of $0.8  million;  (6) higher
collection  and  factory  insurance  expenses  of $0.3  million;  and (7)  other
increases of $0.1 million.


                                       20


     Selling,   General  and   Administrative   Costs.   Selling,   general  and
administrative  costs were $7.2 million during the first quarter of Fiscal 2002,
a $0.2 million increase (2.9%) from $7.0 million for the first quarter of Fiscal
2001, due to increases in payroll expense of $0.4 million,  partially  offset by
decreases in bad debt expense of $0.2 million.

     Depreciation  and  Amortization.   Depreciation  and  amortization  charges
decreased  $2.4  million  (54.5%) to $4.4  million  during the first  quarter of
Fiscal 2002 as compared to $6.8 million during the first quarter of Fiscal 2001.
The decrease is primarily due to various  property and equipment assets becoming
fully depreciated during Fiscal 2001.

     Interest Expense. Interest expense increased $0.7 million from $3.2 million
during the first quarter of Fiscal 2001 to $3.9 million during the first quarter
of Fiscal 2002,  primarily due to $1.7 million  amortization of forbearance fees
included in interest expense, net of the effect of lower interest rates.

     Other Income (Expense).  Other income increased $0.1 million from net other
income of $0.6  million  during the first  quarter  of Fiscal  2001 to net other
income of $0.7 million  during the first  quarter of Fiscal 2002.  This increase
was primarily due to the gain from insurance proceeds received over the net book
value of assets destroyed by fire at our Norfolk, Nebraska plant.

     Income  Taxes.  We assess the amount of valuation  allowance  recorded as a
reduction of deferred  tax assets by  considering  our ability to carryback  net
operating losses, scheduled reversals of future taxable and deductible temporary
differences,  future  taxable income and tax planning  strategies.  Based on our
assessment  of these matters at March 30, 2002 and March 31, 2001, we recorded a
valuation  allowance to reduce the carrying value of our net deferred tax assets
to zero in both periods.

     Capital  Expenditures.   We  made  capital  expenditures  of  $3.6  million
primarily for  machinery  and equipment  during the first quarter of Fiscal 2002
compared to capital  expenditures  of $1.5 million  during the first  quarter of
Fiscal 2001.

52 Week Fiscal Year Ended  December  29, 2001  (Fiscal  2001) vs. 52 Week Fiscal
Year Ended December 30, 2000 (Fiscal 2000)

     General.  We reported a sales  increase of $13.2 million  (5.4%) for Fiscal
2001 and operating income of $4.0 million  compared to a $5.4 million  operating
loss in Fiscal 2000, an improvement of $9.4 million. Principal factors affecting
these comparative results, which are discussed further in the following section,
were higher  collection  fees which  improved  recovery of collection  expenses,
favorable  finished  goods prices,  and lower  depreciation  expense,  partially
offset by higher  natural  gas and fuel oil  expenses.  We  reported a loss from
continuing  operations  of $11.8 million for Fiscal 2001 compared to a loss from
continuing  operations  of $19.6  million for Fiscal  2000,  a reduction  of the
operating loss of $7.8 million.

     Net Sales.  During Fiscal 2001, net sales increased by $13.2 million (5.4%)
to $256.0 million as compared to $242.8 million during Fiscal 2000. The increase
in net sales was  primarily  due to the  following:  (1)  improved  recovery  of
collection expenses,  $9.2 million; (2) favorable finished goods prices resulted
in  a  $4.6  million  increase  (our  average  yellow  grease  prices  increased
52(cent)/cwt  to $8.94/cwt  (6.2%  higher)),  average  tallow  prices  increased
63(cent)/cwt to $9.58/cwt  (6.6% higher),  and average meat and bone meal prices
decreased  $4.60/ton  to  $184.00/ton  (2.4%  lower);  (3) hide  increased  $2.0
million; (4) improved yields on production increased $0.9 million; (5) other net
increases  during Fiscal 2001,  $0.3 million;  partially  offset by (6) finished
product purchased for resale decreased $3.1 million;  and (7) raw material inage
decreased $0.7 million.

     Cost of Sales and Operating Expenses. During Fiscal 2001, cost of sales and
operating  expenses  increased $6.5 million (3.4%) to $196.8 million as compared
to  $190.3  million  during  Fiscal  2000.  The  increase  in cost of sales  and
operating expenses was primarily due to the following:  (1) natural gas and fuel
oil expenses increased $5.4 million; (2) repairs expense increased $2.9 million;
(3) leased  vehicle  expenses  increased  $0.8  million;  (4)  contract  hauling
expenses increased $0.5 million;  (5) other net increased expenses during Fiscal
2001 of $0.8 million;  partially  offset by (6) finished  product  purchased for
resale decreased $3.1 million; and (7) gasoline and lubricant expenses decreased
$0.8 million.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses were $28.6  million  during Fiscal 2001, a $1.9 million
(7.1%),  $26.7  million  during  Fiscal 2000,  primarily  due to higher  payroll
expense.


                                       21



     Depreciation  and  Amortization.   Depreciation  and  amortization  charges
decreased $4.5 million (14.4%),  to $26.6 million during Fiscal 2001 as compared
to $31.2 million  during  Fiscal 2000.  Included in Fiscal 2001 and Fiscal 2000,
depreciation and amortization expense are impairment charges of $0.8 million and
$4.0 million,  respectively,  due to impairment  charges  recorded in accordance
with Statement of Financial Accounting Standards No. 121.

     The Fiscal 2001 impairment charge of $0.8 million pertains solely to assets
held for sale in our rendering  business  segment.  The impairment  charges were
necessary to reduce the carrying value of these assets to management's  estimate
of their net realizable value in light of current economic conditions. Estimated
net realizable  values were based on  information  from business and real estate
brokers, comparable sales, property tax valuations and internal discussions with
our  employees  working  in the  geographic  areas  who were  familiar  with the
specific assets. A summary of the impairment charge follows (in millions):

                           Land                               $0.1
                           Leaseholds and buildings            0.1
                           Equipment and furniture             0.6
                                                              ----

                                    Total impairment          $0.8
                                                              ====

     The Fiscal  2000  impairment  charge of $4.0  million  consists of (1) $2.1
million related to rendering business segment operating assets, (2) $0.1 million
and $0.4 million related to restaurant  services  business segment equipment and
allocable  goodwill,  respectively,  and (3) $1.3 million related to assets held
for sale in our rendering business segment. The impairment charges of the assets
in  operation  were made to reduce the carrying  value to  estimated  fair value
based on the discounted future cash flows of the assets.  The impairment charges
of the assets held for sale were necessary to reduce the carrying value of these
assets  to  management's  estimate  of  their  net  realizable  value  based  on
information from a business  broker. A summary of the impairment  charge follows
(in millions):

                                            Restaurant
                       Rendering             Services               Total
Leaseholds
 and buildings         $     0.6            $      --              $     0.6
Equipment
 and furniture               2.9                  0.1                    3.0
Goodwill                      --                  0.4                    0.4
                       ---------            ---------              ---------
Total impairment       $     3.5            $     0.5              $     4.0
                       =========            =========              =========


     Interest  Expense.  Interest  expense was $14.2 million during Fiscal 2001,
compared to $14.0  million  during  Fiscal  2000,  an  increase of $0.2  million
(1.4%).  The  effects of  amortization  of loan  forbearance  fees  included  in
interest  expense of $2.1 million and higher debt levels during Fiscal 2001 were
partially offset by declining interest rates on our floating rate debt.

     Income Taxes. We recorded a valuation allowance to eliminate the deferred
tax benefit attributable to the Fiscal 2001 loss, as we did in Fiscal 2000.

     Capital  Expenditures.  We made capital expenditures of $9.1 million during
Fiscal  2001 as  compared to $7.7  million in Fiscal  2000,  an increase of $1.4
million  (18.2%).   Fiscal  2001  capital  expenditures  were  principally  for:
operating   equipment,    $5.8   million;    vehicles   (primarily   trucks   or
tractor-trailers),  $1.6 million;  office  equipment,  $1.2  million;  and other
capital expenditures, $0.5 million.

52 Week Fiscal Year Ended  December  30, 2000  (Fiscal  2000) vs. 52 Week Fiscal
Year Ended January 1, 2000 (Fiscal 1999)

     General.  We reported a sales  decrease of $15.8 million  (6.1%) for Fiscal
2000,  and an operating  loss of $5.4 million  compared to an operating  loss of
$12.0  million  in Fiscal  2000 an  operating  loss  reduction  of $6.6  million
(55.0%).  Principal  factors  affecting  these  comparative  results,  which are
discussed  further in the following  section,  were lower  finished  goods sales
prices and lower  sales  volume,  the  effects of which were more than offset by
lower raw material costs and higher  collection fees which improved  recovery of
collection expenses. We

                                       22



reported a loss from  continuing  operations  of $19.6  million  for Fiscal 2000
compared to a loss from continuing  operations of $15.7 million for Fiscal 1999,
an increased loss from continuing operations of $3.9 million (24.8%).

     Net Sales.  During Fiscal 2000, net sales decreased by $15.8 million (6.1%)
to $242.8 million as compared to $258.6 million during Fiscal 1999. The decrease
is net sales was  primarily  due to the  following:  (1)  decreases  in  overall
finished  goods  prices  resulted in an $11.1  million  decrease in sales during
Fiscal 2000 versus  Fiscal 1999 (our  average  yellow  grease  prices  decreased
$1.17/cwt to $8.42/cwt  (12.2%),  average tallow prices  decreased  $1.48/cwt to
$9.58/cwt,  and  average  meat and bone  meal  prices  increased  $40.12/ton  to
$188.60/ton  (27.2%);  (2) products  purchased  for resale  resulted in an $11.9
million;  (3) decreases in the volume of raw materials  processed  resulted in a
$9.7  million  decrease in sales;  and (4) other items  decreased  $1.2  million
compared to Fiscal 1999;  partially  offset by (5) increases in collection  fees
(to offset a portion of the cost incurred in  collecting  raw material) of $13.0
million;  (6) improved  yields in production  of $4.1 million;  and (7) finished
hides sales increased $1.0 million.

     Cost of Sales and Operating Expenses. During Fiscal 2000, cost of sales and
operating  expenses decreased $20.6 million (9.8%) to $190.3 million as compared
to  $210.9  million  during  Fiscal  1999.  The  decrease  in cost of sales  and
operating  expenses was primarily due to the  following:  (1) lower raw material
prices paid, correlating to decreased prices for fats and oils and meat and bone
meal,  resulted in decreases of $6.4 million in cost of sales;  (2) decreases in
products  purchased  for  resale  resulted  in a  $11.9  million  decrease;  (3)
decreases in the volume of raw materials  collected and processed  resulted in a
decrease of  approximately  $1.8  million in cost of sales;  (4)  reductions  in
repairs  expense,  payroll,  and  contract  hauling  operating  expenses of $4.8
million; and (5) other changes resulted in a decrease of $2.7 million; partially
offset by (6) increases in natural gas, sewer expense and utilities, resulted in
an increase of $6.7 million;  and (7) costs of hides  purchased  increased  $0.3
million.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses were $26.7  million  during Fiscal 2000, a $0.1 million
decrease   (0.4%),   from  $26.8  million  during  Fiscal  1999.   Decreases  in
professional and legal fees were partially offset by various expense increases.

     Depreciation  and  Amortization.   Depreciation  and  amortization  charges
decreased $1.7 million  (5.2%),  to $31.2 million during Fiscal 2000 as compared
to $32.9  million  during  Fiscal 1999.  Included in Fiscal 2000 and Fiscal 1999
depreciation and amortization expense are impairment charges of $4.0 million and
$1.4  million,  respectively,  due to  impairment  recorded in  accordance  with
Statement of Financial Accounting Standards No. 121.

     The Fiscal  2000  impairment  charge of $4.0  million  consists of (1) $2.1
million related to rendering business segment operating assets, (2) $0.1 million
and $0.4 million related to restaurant  services  business segment equipment and
allocable  goodwill,  respectively,  and (3) $1.3 million related to assets held
for sale in our rendering business segment. The impairment charges of the assets
in  operation  were made to reduce the carrying  value to  estimated  fair value
based on the discounted future cash flows of the assets.  The impairment charges
of the assets held for sale were necessary to reduce the carrying value of these
assets  to  management's  estimate  of  their  net  realizable  value  based  on
information from a business  broker. A summary of the impairment  charge follows
(in millions):

                                              Restaurant
                         Rendering             Services             Total
Leaseholds
 and buildings           $     0.6            $      --           $     0.6
Equipment
 and furniture                 2.9                  0.1                 3.0
Goodwill                        --                  0.4                 0.4
                         ---------            ---------           ---------
Total impairment         $     3.5            $     0.5           $     4.0
                         =========            =========           =========


     The Fiscal 1999 impairment charge of $1.4 million pertains solely to assets
held for sale in our rendering  business  segment.  The impairment  charges were
necessary to reduce the carrying value of these assets to management's  estimate
of their net realizable value.  Estimated net realizable values were based on an
offer from a  prospective  buyer and  information  from real estate  brokers.  A
summary of the impairment charge follows (in millions):


                   Leaseholds and buildings           $ 1.1
                   Equipment                            0.3
                                                      -----
                            Total impairment          $ 1.4
                                                      =====

                                       23



     Interest  Expense.  Interest  expense was $14.0 million during Fiscal 2000,
compared to $15.5 million during Fiscal 1999, a decrease of $1.5 million (9.7%).
Lower debt during Fiscal 2000 was partially offset by higher interest rates.

     Income Taxes.  We recorded a valuation  allowance to eliminate the deferred
tax benefit  attributable to the Fiscal 2000 loss. This results in a decrease in
income tax benefit of $10.0 million, compared to Fiscal 1999. In Fiscal 1999, we
recorded a $10.0 million income tax benefit,  which consisted of $9.2 million of
federal tax benefit and $0.8 million for various state and foreign tax benefits.

     Capital  Expenditures.  We made capital expenditures of $7.7 million during
Fiscal  2000 as  compared  to $9.9  million in Fiscal  1999,  a decrease of $2.2
million (22.2%).

     Discontinued Operations. The operations of the Bakery By-Products Recycling
segment have been  classified  as  discontinued  operations.  In Fiscal 2000, we
realized a gain related to a reduction  in an  indemnification  reserve,  net of
tax, of $0.4  million  related to the sale of this  business  segment  which was
finalized on April 5, 1999, compared to a loss of $0.3 million in Fiscal 1999.

Financing, Liquidity and Capital Resources

     Recapitalization.  On May 13, 2002, we consummated the Recapitalization and
executed a new amended and restated credit agreement with our lenders whereby we
exchanged borrowings  outstanding under our previous credit agreement, a portion
of the accrued  interest and commitment  fees, and forbearance  fees payable for
newly issued common stock equal to 75% of our total outstanding  common stock on
a fully diluted basis (exclusive of stock options issued and  outstanding),  and
6% cumulative redeemable preferred stock with a face value of $10.0 million. Our
new  credit  agreement  includes  a term loan in the  principal  amount of $61.0
million and also provides for a revolving  credit  facility which will enable us
to borrow or issue letters of credit of up to $17.3 million.

     Substantially  all of  our  assets  are  either  pledged  or  mortgaged  as
collateral  for  borrowings  under  the new  credit  agreement.  The new  credit
agreement  contains  certain terms and  covenants,  which,  among other matters,
restrict  the  incurrence  of  additional  indebtedness,  the  payment  of  cash
dividends,  the  retention  of certain  proceeds  from sales of assets,  and the
annual amount of capital  expenditures,  and requires the maintenance of certain
minimum financial ratios.

     The  classification  of long-term debt in the  accompanying  March 30, 2002
consolidated  balance sheet is based on the  repayment  terms of the debt issued
under  the new  credit  agreement  pursuant  to the  Recapitalization  and  also
reflects an estimate of the effect of applying the  provisions  of Statement No.
15,  Accounting  by Debtors and  Creditors  for  Troubled  Debt  Restructurings.
Statement  No. 15 requires  that the  existing  amount of debt owed by us to the
lenders be reduced by the fair value of the equity interest  granted and that no
gain  from  restructuring  our  debt  be  recognized.  Interest  expense  on the
remaining  carrying amount of debt reported in our financial  statements will be
based on a new  effective  interest  rate that equates the present  value of the
future  cash  payment  specified  by the new  terms  of the term  loan  with the
carrying amount of the debt.

     As shown in the  Consolidated  Balance  Sheet at December 29, 2001,  we had
$120.0  million of debt due under our bank  credit  facilities  classified  as a
current  liability  because our previous credit agreement had a maturity date of
June 30, 2001. Effective June 29, 2001, we entered into a forbearance  agreement
with the Lenders.  The forbearance  agreement,  which was amended several times,
among other things, provided that the Lenders would not exercise their rights in
connection  with certain  defaults  under the credit  agreement  until April 30,
2002,  raised the interest rate under the credit agreement from 1% over prime to
3% over prime, required the payment of a fee of $3.9 million to the Lenders with
respect  to  the  forbearance  agreement,  reduced  the  commitment  during  the
forbearance period by $2.0 million,  from $128.5 million to $126.5 million,  and
limited  financial  covenants to certain minimum cash flows,  based upon our own
projected cash flow for certain periods during the forbearance period.

     On March 15, 2002, we entered into the  Recapitalization  Agreement.  Under
the terms of the Recapitalization Agreement, the forbearance period was extended
to May 31, 2002, and the agreement  stipulated that our  Recapitalization  would
occur through a series of transactions as described above.

     On March 30, 2002, we had a working capital deficit of $3.3 million and our
working  capital  ratio was 0.92 to 1. On December  29,  2001,  we had a working
capital  deficit of $116.7  million and our working  capital ratio was 0.26 to 1
compared to a working  capital  deficit of $106.8 million and a working  capital
ratio of 0.30 to 1 on December 30, 2000.

                                       24



     The Recapitalization caused our current liabilities on a pro forma basis as
of March 30,  2002 to  decrease  by  approximately  $7.8  million  resulting  in
positive  working capital of  approximately  $4.5 million.  The decrease in debt
resulting from the Recapitalization will reduce our interest expense.

     Net cash  provided by operating  activities  was $4.9 million for the first
quarter of Fiscal 2002 compared to $1.8 million in the  comparable  prior fiscal
year  period,  an increase  of $3.1  million  principally  due to changes in the
balances of operating  assets and liabilities  which resulted in additional cash
flow in the Fiscal  2002  period.  Cash used by  investing  activities  was $2.7
million  for the first  quarter of Fiscal 2002  compared to $1.4  million in the
prior fiscal year period. The increased level of expenditures in Fiscal 2002 was
due primarily to increased capital expenditures for machinery and equipment. Net
cash used by  financing  activities  was $2.9  million  in the first  quarter of
Fiscal  2002  compared  to $1.0  million  in the first  quarter  of Fiscal  2001
principally  due to additional  reductions of long-term  debt in the Fiscal 2002
period.

     Net cash provided by operating  activities was $5.6 million,  $16.2 million
and $0.7 million in Fiscal 2001, Fiscal 2000 and Fiscal 1999, respectively.  Net
cash provided by operating  activities in Fiscal 2001 decreased  principally due
to increased accounts  receivable arising from increased sales and reductions in
accounts payable and accrued  expenses,  partially due to lower levels of credit
extended  by  trade  vendors  and  due to a $5.9  million  cash  payment  to our
insurance claim  administrator  under a letter of credit  arrangement.  The cash
payment was funded through a borrowing under the credit agreement.

     The current negative economic  environment in our markets has the potential
to  adversely  impact  our  liquidity  in a variety of ways,  including  through
reduced sales and potential  inventory  buildup.  Our management has revised our
sales  forecasts  in light  of our  view of  current  economic  conditions,  and
believes  that cash  generated  from  operating  activities at the same level as
Fiscal  2001 and funds  available  under the new  amended  and  restated  credit
agreement  should be  sufficient  to meet our working  capital needs and capital
expenditures  for at  least  the  next 12  months.  There  can be no  assurance,
however,  that a continued  slowdown in the  economy or other  factors  will not
cause us to fail to meet management's revised forecasts,  or otherwise result in
liquidity concerns.

Quantitative and Qualitative Disclosures About Market Risks

     Market risks  affecting  our company are  exposures to changes in prices of
the finished products we sell,  interest rates on debt, and the price of natural
gas  used  in  our  plants.  Predominately  all  of our  finished  products  are
commodities that are generally sold at prices prevailing at the time of sale. We
have used  interest rate and,  through  March 2001,  natural gas swaps to manage
these risks.  Beginning in April 2001, we are using natural gas forward purchase
agreements  with our  suppliers  to manage the price risk of natural gas used in
our  facilities.  While we do have  international  operations,  and  operate  in
international  markets,  we consider our market risks in such  activities  to be
immaterial.

     At March 30, 2002 and December 29, 2001, we were party to two interest rate
swap agreements. Under the terms of the swap agreements, the interest obligation
on $45 million of credit  agreement  floating-rate  debt was exchanged for fixed
rate contracts which bear interest,  payable  quarterly.  One swap agreement for
$25 million  matures  June 27, 2002,  bears  interest at 6.5925% and our receive
rate is based on the  three-month  LIBOR.  The  second  swap  agreement  for $20
million  matures on June 27, 2002,  bears interest at 9.17% and our receive rate
is based on the Base Rate.

     As of March 30, 2002,  we have  forward  purchase  agreements  in place for
purchases of  approximately  624,000 mmbtu's of natural gas for the period April
through December, 2002, based on an average purchase price of $2.78/mmbtu.

Critical Accounting Policies

     We follow  certain  significant  accounting  policies  when  preparing  our
consolidated  financial  statements.  A complete  summary of these  policies  is
included in Note 1 of Notes to Consolidated Financial Statements.

     Certain of the policies  require our  management  to make  significant  and
subjective  estimates  which are sensitive to deviations of actual  results from
management's  assumptions.  In particular,  management makes estimates regarding
the fair value of our  reporting  units in  assessing  impairment  of  goodwill,
estimates  regarding  future  undiscounted  cash  flows  from the  future use of
long-lived assets whenever events or changes in circumstances  indicate that the
carrying  amount  of a  long-lived  asset  may  not  be  recoverable,  estimates
regarding  the net  realizable  value of  long-lived  assets held for sale,  and
estimates  regarding self insured risks including  insurance,  environmental and
litigation contingencies.


                                       25


     In assessing  impairment of goodwill we use estimates  and  assumptions  in
estimating the fair value of our reporting units. In assessing the impairment of
long-lived assets where there has been a change in circumstances  indicating the
carrying value of a long-lived  asset may not be recoverable,  we have estimated
future  undiscounted net cash flows from the acquired operations and from use of
the asset,  respectively,  based on actual  historical  results and expectations
about future economic circumstances  including future business volume,  finished
product  prices and operating  costs.  The estimates of fair values of reporting
units,  future net cash flows from the acquired  operations and use of the asset
could  change if actual  prices and costs differ due to industry  conditions  or
other factors  affecting  the level of business  volume or our  performance.  In
assessing  impairment of long-lived  assets held for sale, we have estimated the
net realizable  value of such assets based on information  from various external
sources regarding possible selling prices for such assets. These estimates could
change based on changes in market conditions,  interest rates and other factors.
In estimating  liabilities for self insured risks, we consider  information from
outside consultants and experts, and past historical  experience,  in projecting
future costs  expected to be incurred.  These  estimates  could change if future
events are  different  than  assumed by  management,  actual costs to settle the
liabilities  differ from those estimated and the  circumstances  associated with
the self insured risks change.

Recent Accounting Pronouncements

     The Financial  Accounting  Standards Board (FASB) recently issued Statement
of Financial  Accounting  Standards  No. 143,  Accounting  for Asset  Retirement
Obligations  (Statement  143).  Statement 143 establishes  requirements  for the
accounting for removal costs associated with asset  retirements and is effective
for  fiscal  years  beginning  after  June  15,  2002,  with  earlier   adoption
encouraged.  We are  currently  assessing  the  impact of  Statement  143 on our
consolidated financial statements.














                                       26


                                  OUR BUSINESS

Darling

     Founded by the Swift meat packing interests and the Darling family in 1882,
we were  incorporated  in  Delaware  in 1962  under  the name  "Darling-Delaware
Company,  Inc." On December 28, 1993, we changed our name from "Darling-Delaware
Company, Inc." to "Darling International Inc."

     We are a recycler of food  processing  by-products.  We collect and recycle
animal processing  by-products and used restaurant cooking oil. In addition,  we
provide  grease trap  collection  services to  restaurants.  We process such raw
materials at 26 facilities  located  throughout  the United States into finished
products  such as tallow,  meat and bone meal and yellow  grease.  We sell these
products  nationally  and  internationally,  primarily  to  producers of various
industrial and commercial  oleo-chemicals,  soaps, pet foods and livestock feed,
for use as ingredients in their  products or for further  processing  into basic
chemical compounds.

     Commencing  1998, as part of an overall strategy to better commit financial
resources, we organized our operations into two segments. These are:

     o   Rendering,  the core business of turning  inedible  waste from meat and
         poultry  processors  into high  quality feed  ingredients  and fats for
         other industrial applications; and

     o   Restaurant  Services,  a group focused on growing the grease collection
         business while  expanding the line of services,  which includes  grease
         trap servicing, offered to restaurants and food processors.

     Due to unfavorable  market  conditions  resulting from declining prices, in
Fiscal 2000, the Esteem Product  division,  a business  dedicated to using newly
developed  technologies  to  produce  novel  products  from  established  supply
sources, was combined with our rendering operations. In November 1998, we made a
strategic  decision  to dispose of an  additional  segment,  Bakery  By-Products
Recycling,  a group which produced high quality bakery  by-products for the feed
industry.  The results of the Bakery  By-Products  Recycling  segment  have been
reported  separately  as  discontinued  operations.  See  Note  15 of  Notes  to
Consolidated Financial Statements on page F-34 for further information regarding
discontinued operations. For the financial results of our business segments, see
Note 17 of Notes to Consolidated Financial Statements beginning on page F-36.

     Our net external sales from continuing operations by operating segment were
as follows:

                            Fiscal                Fiscal            Fiscal
                             2001                  2000             1999
                        -------------------------------------------------------
Continuing operations:
  Rendering               $194,960   76.2%  $186,445   76.8%  $204,631  79.1%
  Restaurant Services       61,014   23.8     56,350   23.2     53,939  20.9
                          --------  ------  --------  ------  -------- ------
                Total     $255,974  100.0%  $242,795  100.0%  $258,570 100.0%
                          ========  ======  ========  ======  ======== ======

Processing Operations

     We  create  finished  products  primarily  through  the  drying,  grinding,
separating  and blending of our various raw  materials.  The process starts with
the  collection  of animal  processing  by-products  (fat,  bones,  feathers and
offal),  and used  restaurant  cooking oil from meat  packers,  grocery  stores,
butcher shops, meat markets, poultry processors and restaurants.

     The animal  processing  by-products  are ground and heated to extract water
and  separate  oils  from  animal  tissue as well as to  sterilize  and make the
material  suitable  as an  ingredient  for  animal  feed.  Meat and bone meal is
separated from the cooked  material by pressing the material,  then grinding and
sifting it through screens.  The separated tallow is centrifuged  and/or refined
for purity.  The primary finished products derived from the processing of animal
by-products are tallow and meat and bone meal. Other by-products include poultry
meal,  feather  meal and blood meal.  Used  restaurant  cooking oil is processed
under a separate procedure that involves heating,  settling and sterilizing,  as
well as refining,  resulting in derived yellow grease, feed-grade animal fat, or
oleo-chemical feedstocks.



                                       27



Purchase and Collection of Raw Materials

     We operate a fleet of  approximately  800 trucks  and  tractor-trailers  to
collect raw materials from more than 80,000 restaurants,  butcher shops, grocery
stores, and independent meat and poultry  processors.  We replace or upgrade our
vehicle fleet to maintain efficient operations.

     Raw materials are collected in one of two manners. Certain large suppliers,
such as large meat  processors  and poultry  processors  are furnished with bulk
trailers  in which the raw  material  is loaded.  We  transport  these  trailers
directly to a processing facility. We provide the remaining suppliers, primarily
grocery  stores and butcher  shops with  containers  in which to deposit the raw
material.  The  containers  are  picked up by or  emptied  into our  trucks on a
periodic  basis.  The type and  frequency of service is determined by individual
supplier  requirements,  the volume of raw material  generated by the  supplier,
supplier location, and weather, among other factors.

     Used  restaurant  cooking  oil is  placed  in  various  sizes  and types of
containers  which we supply.  In some  instances,  these  containers  are loaded
directly onto the trucks,  while in other  instances the oil is pumped through a
vacuum hose into the truck. We also provide an alternative collection service to
restaurants  called  CleanStar(R)  2000,  which is a  self-contained  collection
system that is housed  inside the  restaurant,  with the used cooking oil pumped
directly into collection  vehicles via an outside valve. The  CleanStar(R)  2000
system  and  service  is  provided  either  on a fee  basis to the raw  material
customer  or as a  negotiated  offset  to the cost of raw  materials  purchased.
Approximately  11.1% of our restaurant  suppliers  utilize the CleanStar(R) 2000
system.  The frequency of all forms of  collection  service is determined by the
volume of oil generated by the restaurant.

     The  raw  materials  we  collect  are  transported  either  directly  to  a
processing  plant  or  to a  transfer  station,  where  materials  from  several
collection  routes are loaded into  trailers  and  transported  to a  processing
plant.  Collections of animal processing  by-products  generally are made during
the day, and materials are delivered to plants for processing within 24 hours of
collection to eliminate spoilage.  Collection of used restaurant cooking oil can
be made at any time of the day or night, depending on supplier preference; these
materials may be held for longer periods of time before processing.  We charge a
collection  fee to offset a  portion  of the cost  incurred  in  collecting  raw
material.

     During fiscal year 2001,  our largest  single  supplier  accounted for less
than  6.8% of the  total raw  material  we  processed,  and the 10  largest  raw
materials  suppliers accounted for approximately 34.8% of the total raw material
we processed.

Raw Materials Pricing

     We have two primary pricing  arrangements with our raw materials suppliers.
Approximately  half of our  annual  volume of raw  materials  is  acquired  on a
"formula"  basis.  Under a formula  arrangement,  the  charge or credit  for raw
materials is tied to published finished product commodity prices after deducting
a fixed service charge.  We acquire the remaining  annual volume of raw material
under  "non-formula"  arrangements  whereby  suppliers  either  are paid a fixed
price,  are not paid, or are charged for the  collection  service,  depending on
various economic and competitive factors.

     The credit  received or amount  charged for raw material under both formula
and non-formula arrangements is based on various factors,  including the type of
raw materials,  the expected value of the finished  product to be produced,  the
anticipated  yields,  the volume of  material  generated  by the  supplier,  and
processing and transportation costs. Competition among processors to procure raw
materials also affects the price paid for raw materials.

     Formula  prices are  generally  adjusted on a weekly or monthly basis while
non-formula  prices or charges  are  adjusted as needed to respond to changes in
finished product prices.

Finished Products

     The finished products that result from the processing of animal by-products
are oils (primarily  tallow and yellow grease) and proteins  (primarily meat and
bone meal).  Oils are used as ingredients in the production of pet food,  animal
feed and soaps.  Oleo-chemical producers use these oils as feedstocks to produce
specialty  ingredients used in paint, rubber,  paper,  concrete,  plastics and a
variety of other consumer and industrial  products.  Meals are used primarily as
high protein additives in pet food and animal feed.

     Predominantly all of our finished products are commodities which are quoted
on established  commodity  markets or are priced  relative to such  commodities.
While our finished  products are generally sold at prices prevailing at the time
of sale,  our ability to deliver  large  quantities  of finished  products  from
multiple locations and

                                       28



to coordinate sales from a central location enables us to occasionally receive
a premium over the then-prevailing market price.

Marketing, Sales and Distribution of Finished Products

     We  market  our  finished  products  worldwide.  Marketing  activities  are
primarily  conducted through our marketing  department which is headquartered in
Irving,  Texas. We also maintain sales offices in Los Angeles,  California,  and
Newark, New Jersey for sales and distribution of selected  products.  This sales
force is in contact with several  hundred  customers  daily and  coordinates the
sale and assists in the distribution of most finished  products  produced at our
processing  plants.  We  sell  our  finished  products  internationally  through
commodities brokers and through our agents in various countries.

     We sell to  numerous  foreign  markets,  including  the  European  Economic
Community,  Asia,  the Pacific Rim, North Africa,  Mexico and South America.  We
have no material  foreign  operations,  but export a portion of our  products to
customers in various foreign  counties.  Total export sales were $138.1 million,
$128.7  million  and $107.4  million  for the years  ended  December  29,  2001,
December 30, 2002, and January 1, 2000, respectively.  The level of export sales
may vary from year to year depending on the relative strength of domestic versus
overseas markets.  We obtain payment protection for most of our foreign sales by
requiring  payment  before  shipment or by  requiring  bank letters of credit or
guarantees of payment from U.S. government agencies.  We ordinarily are paid for
our products in U.S.  dollars and have not  experienced  any  material  currency
translation losses or any material foreign exchange control difficulties.

     We have not  experienced  any  material  restrictions  on the export of our
products,  although certain  countries,  including India and certain Middle East
countries  restrict  the import of proteins  and fats and oils made from porcine
and bovine material, and the European Community has restrictions on proteins and
fats and oils  made from  specified  bovine  materials.  The  Bovine  Spongiform
Encephalopathy  (BSE)  or  "mad  cow  disease"situation  in  Europe  and new FDA
restrictions,  coupled with much lower  prices for  competing  commodities,  has
caused lower prices for some of our key products.

     Finished  products  produced by us are  distributed  primarily by truck and
rail  from  our  plants  shortly  following  production.  While  there  are some
temporary   inventory   accumulations  at  various  port  locations  for  export
shipments,  inventories rarely exceed three weeks' production and, therefore, we
use limited  working  capital to carry  inventories  and reduce our  exposure to
fluctuations in commodity prices.

Competition

     Our management believes that the most competitive aspect of the business is
the  procurement  of raw  materials  rather than the sale of finished  products.
During  the last ten years,  pronounced  consolidation  within the meat  packing
industry has resulted in bigger and more efficient slaughtering operations,  the
majority of which utilize "captive"  processors.  Simultaneously,  the number of
small meat packers,  which have  historically been a dependable source of supply
for  non-captive  processors,  has decreased  significantly.  Although the total
amount  of  slaughtering  may  be  flat  or  only  moderately  increasing,   the
availability, quantity and quality of raw materials available to the independent
processors  from these  sources  have all  decreased.  These  factors  have been
offset, in part, however, by increasing  environmental  consciousness.  The need
for restaurants to comply with environmental  regulations  concerning the proper
disposal of used  restaurant  cooking oil is offering a growth area for this raw
material  source.  Major  competitors  include:  Baker  Commodities in the West;
National  By-Products  in the Midwest;  and Griffin  Industries in Texas and the
Southeast.  Each  of  these  businesses  competes  in  both  the  Rendering  and
Restaurant Service segments.

     In  marketing  our  finished  products,  we  face  competition  from  other
processors and from producers of other suitable commodities. Tallows and greases
are in certain  instances  substitutes for soybean oil and palm stearine,  while
meat and bone meal is a substitute for soybean meal. Consequently, the prices of
tallow,  yellow grease,  and meat and bone meal correlate with these  substitute
commodities.  The markets  for  finished  products  are  impacted  mainly by the
worldwide  supply  of fats,  oils,  proteins  and  grains.  Other  factors  that
influence  the prices  that we receive  for our  finished  products  include the
quality of our  finished  products,  consumer  health  consciousness,  worldwide
credit conditions and U.S.  government  foreign aid. From time to time, we enter
into  arrangements  with our suppliers of raw  materials  pursuant to which such
suppliers buy back our finished products.

Seasonality

     The  amount of raw  materials  made  available  to us by our  suppliers  is
relatively  stable on a weekly basis except for those weeks which  include major
holidays, during which the availability of raw materials declines

                                       29



because major meat and poultry  processors are not operating.  Weather is also a
factor.  Extremely  warm  weather  adversely  affects our ability to make higher
quality  products  because the raw  material  deteriorates  more rapidly than in
cooler weather,  while extremely cold weather, in certain instances,  can hinder
the collection of raw materials.

Employees and Labor Relations

     As of December 29, 2001, we employed  approximately 1,270 persons full-time
in  continuing  business  segments.  Approximately  48.3% of the total number of
employees are covered by collective bargaining  agreements,  however, we have no
national or  multi-plant  union  contracts.  Our  management  believes  that our
relations with our employees and their representatives are good. There can be no
assurance,  however, that new agreements will be reached without union action or
will be on terms satisfactory to us.

Facilities

     Our corporate  headquarters  are located at 251 O'Connor  Ridge  Boulevard,
Suite  300,  Irving,  Texas  in an  office/operating  facility,  where  we lease
approximately 20,000 square feet.

     Our 26 operating  facilities consist of 19 full service rendering plants, 4
yellow  grease/trap  grease plants, 1 blending plant, 1 edible plant, and 1 trap
grease plant. Except for 4 leased facilities, we own all of these facilities. In
addition,  we own or lease 22  transfer  stations  in the  United  States  and 1
transfer  station in Canada  that serve as  collection  points for  routing  raw
material to the  processing  plants set forth below.  Some  locations  service a
single  business  segment  while others  service  both  business  segments.  The
following is a listing of our operating facilities by business segment:

LOCATION              DESCRIPTION
--------              -----------

Combined Rendering and Restaurant Services Business Segments
------------------------------------------------------------
Blue Earth, MN        Rendering/Yellow Grease
Boise, ID             Rendering/Yellow Grease
Collinsville, OK      Rendering/Yellow Grease
Dallas, TX            Rendering/Yellow Grease
Detroit, MI           Rendering/Yellow Grease/Trap
Fresno, CA            Rendering/Yellow Grease
Kansas City, KS       Rendering/Yellow Grease
Los Angeles, CA       Rendering/Yellow Grease/Trap
Newark, NJ            Rendering/Yellow Grease
San Francisco, CA *   Rendering/Yellow Grease/Trap
Sioux City, IA        Rendering/Yellow Grease
St. Louis, MO         Rendering/Yellow Grease
Tacoma, WA *          Rendering/Yellow Grease/Trap
Turlock, CA           Rendering/Yellow Grease

Rendering Business Segment
--------------------------
Coldwater, MI         Rendering
Houston, TX           Rendering
Linkwood, MD          Rendering
Omaha, NE             Rendering
Omaha, NE *           Blending
Omaha, NE             Edible Oils
Wahoo, NE             Rendering





                                       30


Restaurant Services Business Segment
------------------------------------
Chicago, IL           Trap
Ft. Lauderdale, FL *  Yellow Grease/Trap
Houston, TX           Yellow Grease/Trap
No. Las Vegas, NV     Yellow Grease/Trap
Tampa, FL             Yellow Grease/Trap


---------------------------
* Property is leased. Annual rent expense for these leased properties in the
  aggregate was $0.6 million in fiscal 2001.


Legal Proceedings

     Melvindale,  Michigan.  A group of  residents  living near our  Melvindale,
Michigan  plant  has filed  suit,  purportedly  on behalf of a class of  persons
similarly situated. The class has been certified for injunctive relief only. The
court  declined to certify a damage class but has  permitted  approximately  300
people to join the lawsuit as plaintiffs. The suit is based on legal theories of
trespass, nuisance and negligence and/or gross negligence, and is pending in the
United States District Court,  Eastern District of Michigan.  Plaintiffs  allege
that emissions to the air,  particularly  odor,  from the plant have reduced the
value and enjoyment of plaintiffs'  property,  and plaintiffs  seek  unspecified
compensatory  and  exemplary  damages  in an amount in  excess  of  $25,000  per
plaintiff  and  unspecified  injunctive  relief.  We are unable to estimate  our
potential  liability  from this  lawsuit.  In a  lawsuit  with  similar  factual
allegations,  also pending in United States District Court,  Eastern District of
Michigan,  the City of  Melvindale  has  filed  suit  against  us based on legal
theories of nuisance, trespass,  negligence and violation of Melvindale nuisance
ordinances  seeking damages and declaratory and injunctive relief. The court has
dismissed the trespass counts in both lawsuits,  and all of the damage claims in
the suit  filed by the  City of  Melvindale  have  been  dismissed.  The City of
Melvindale now seeks unspecified  injunctive relief. We or our predecessors have
operated a rendering  plant at the  Melvindale  location since 1927 in a heavily
industrialized  area down river south of  Detroit.  We have taken and are taking
all reasonable steps to minimize odor emissions from our recycling processes and
are defending the lawsuit vigorously.

     Long  Island  City,  New York.  We are a party to a lawsuit  that  seeks to
require an  environmental  cleanup at a property in Long Island  City,  New York
where we formerly  operated a rendering plant  (referred to as the "Site").  DMJ
Associates (DMJ), which holds a mortgage on the Site, has filed suit against us,
as a former owner of the Site, as well as others  including the present  tenants
and operators of the Site,  the owner of an abandoned  hazardous  waste disposal
site adjoining the Site (the "Disposal  Facility"),  and companies that disposed
of wastes at the Disposal  Facility  (the  "Generator  Defendants").  DMJ argues
that,  inter alia,  under federal law it is entitled to relief  directed to have
the  defendants  remediate  the  contamination.  DMJ seeks  both  equitable  and
monetary relief from all defendants for investigation, abatement and remediation
of the Site. DMJ has not yet provided information sufficient for us to ascertain
the magnitude or amount of DMJ's total claim nor our alleged share thereof. As a
result, we are unable to estimate our potential  liability from this lawsuit. We
do not have  information  suggesting  that we contributed in any material way to
any contamination that may exist at the Site. We are actively defending the suit
and are  awaiting  a  decision  on a motion on summary  judgment  regarding  the
standing of the plaintiff.

     Sauget,  Illinois.  We are a party to a lawsuit that seeks to recover costs
related to an  environmental  cleanup in or near  Sauget,  Illinois.  The United
States had filed a complaint against Monsanto Chemical Company,  Solutia,  Inc.,
Anheuser-Busch,  Inc.,  Union  Electric,  and 14 other  defendants,  seeking  to
recover cleanup costs. Monsanto (which merged with Pharmacia and Upjohn, Inc. in
2000 and is now known as  Pharmacia  Corporation)  and  Solutia  in turn filed a
third party  complaint  seeking  contribution  from the United  States,  several
federal  agencies,  and six more  companies,  in addition to us. As  potentially
responsible  parties  themselves,  Pharmacia  and Solutia are seeking to recover
unspecified  proportionate shares from each of the other parties, in addition to
us, of an as yet  undetermined  total  cleanup  cost. A  subsidiary  of ours had
operated an inorganic fertilizer plant in Sauget, Illinois for a number of years
prior to closing it in the 1960's. We are defending this case vigorously, and do
not believe,  based upon currently  available  information,  that the fertilizer
plant contributed in any significant way to the contamination that is leading to
the environmental cleanup, or that our share, if any, of the cost of the cleanup
will be  material.  Accordingly,  the we are unable to  estimate  our  potential
liability from this lawsuit.


                                       31



     Other Litigation. We are also a party to several other lawsuits, claims and
loss contingencies  incidental to our business,  including assertions by certain
regulatory agencies related to air, wastewater,  and storm water discharges from
our processing facilities.

     Self Insured Risks. We purchase our workers compensation,  auto and general
liability  insurance on a retrospective  basis. We accrue our expected  ultimate
costs related to claims occurring during each fiscal year and carry this accrual
as a reserve until we pay such claims.

     We  have  established  loss  reserves  for  insurance,   environmental  and
litigation  matters as a result of the matters  discussed  above.  Although  the
ultimate liability cannot be determined with certainty,  our management believes
that reserves for contingencies are reasonable and sufficient based upon present
governmental regulations and information currently available to management.  The
accrued  expenses  and  other  noncurrent  liabilities  classifications  in  our
consolidated  balance sheets include reserves for insurance,  environmental  and
litigation  contingencies  of $10.6  million at both March 30, 2002 and December
29, 2001,  respectively.  There can be no assurance,  however,  that final costs
related to these matters will not exceed current estimates.  We believe that any
additional liability relative to lawsuits and claims which may not be covered by
insurance  would not likely  have a  material  adverse  effect on our  financial
position, although it could potentially have a material impact on the results of
operations in any one year.

Regulations

     We are subject to the rules and regulations of various  federal,  state and
local governmental  agencies.  Material rules and regulations and the applicable
agencies are:

     o   the Food and Drug  Administration  (FDA), which regulates food and feed
         safety;

     o   the United States  Department of Agriculture  (USDA),  which  regulates
         collection and production methods;

     o   the  Environmental  Protection  Agency (EPA),  which  regulates air and
         water  discharge  requirements,  as well as local  and  state  agencies
         governing air and water discharge;

     o   state  Departments of  Agriculture,  which regulate  animal  by-product
         collection and transportation procedures and animal feed quality; and

     o   the United States  Department  of  Transportation  (USDOT),  as well as
         local  and  state  agencies,   which  regulate  the  operation  of  our
         commercial vehicles.

     Such rules and  regulations  may influence our operating  results at one or
more facilities.

     Effective  August,  1997, the FDA promulgated a rule prohibiting the use of
mammalian proteins,  with some exceptions,  in feeds for cattle, sheep and other
ruminant  animals.  The  intent of this rule is to  prevent  the  spread of BSE,
commonly  referred to as "mad cow disease," should the disease ever occur in the
United  States.  Our  management  believes  that we are in  compliance  with the
provisions of the rule.









                                       32



                                 OUR MANAGEMENT

Executive Officers and Directors

     Our executive officers and directors,  their ages and their positions as of
May 13, 2002, are as follows:  Our executive officers serve at the discretion of
the Board of Directors.


Name                        Age  Position
----                        ---  --------

Denis J. Taura              62   Chairman of the Board and Chief Executive
                                 Officer

James A. Ransweiler         58   President and Chief Operating Officer

John O. Muse                53   Executive Vice President - Finance and
                                 Administration

Neil Katchen                56   Executive Vice President - Operations

Mitchell Kilanowski         50   Executive Vice President - Marketing and
                                 Research

Gilbert L. Guitierrez       45   Senior Vice President - Business Development

Joseph R. Weaver, Jr.       55   General Counsel and Secretary

Fredric J. Klink (1) (2)    68   Director

O. Thomas Albrecht (1) (2)  55   Director

Charles Macaluso (1) (2)    58   Director

Richard A. Peterson (1) (2) 60   Director

----------------

(1)      Member of the audit committee

(2)      Member of the compensation committee

     Denis J. Taura has served as our Chairman of the Board and Chief  Executive
Officer  since August 1999 and devotes at least 60% of his business  time to our
company. Mr. Taura is a partner in the management  consulting firm Taura Flynn &
Associates,  LLC.  Previously,  in October  1991,  Mr. Taura  founded D. Taura &
Associates,  a management  consulting  firm and a predecessor of Taura Flynn and
Associates,  LLC. Mr. Taura  served as chairman of D. Taura &  Associates.  From
January 1995 through  October  1996,  Mr. Taura was also  affiliated  with Zolfo
Cooper LLC, a management  consulting  firm. From 1972 to October 1991, Mr. Taura
was a partner with KPMG LLP.  Mr.  Taura  serves as a director of Kasper  A.L.S.
Limited.

     James A. Ransweiler has served as the President and Chief Operating Officer
of our company  since August 1999.  Mr.  Ransweiler  served as the  President of
Darling  Rendering from October 1997 to August 1999. From August 1986 to October
1997, he served as Vice President of our Eastern  Region,  except for the period
from  January  1989  to  February  1990  when  he  served  as  Special  Projects
Coordinator.

     John O. Muse has  served as our  Executive  Vice  President  - Finance  and
Administration  since  February  2000.  From October 1997 to February  2000,  he
served as our Vice President and Chief Financial  Officer.  From 1994 to October
1997 he served as Vice President and General Manager at Consolidated  Nutrition,
L.C. Prior to serving at Consolidated Nutrition,  Mr. Muse was Vice President of
Premiere  Technologies,  a  wholly-owned  subsidiary  of  Archer-Daniels-Midland
Company. Since August 1998, Mr. Muse has served on an advisory board for Factory
Mutual Insurance Company.

     Neil Katchen has served as  Executive  Vice  President -  Operations  since
November  2001.  Prior thereto he served as Vice President of our Eastern Region
beginning  in  October  1997 and served as General  Manager of our  Newark,  New
Jersey facility from January 1990 to October 1997.


                                       33



     Mitchell  Kilanowski has served as our Executive Vice President - Marketing
and  Research  since  January  1999.  From  September  1997 to January  1999 Mr.
Kilanowski served as our Vice President-Marketing. From August 1986 to September
1997 he served as Director of Domestic Sales.  From March 1975 to August 1986 he
served in customer sales and service.

     Gilbert L.  Gutierrez  has served as our Senior  Vice  President - Business
Development  since November 2001.  Prior thereto he served as General Manager of
our Los Angeles,  California  facility from June 1997 to November 2001. Prior to
serving as General Manager, he served as our Vice President - Human Resources.

     Joseph R. Weaver,  Jr. has served as our General  Counsel  since March 1997
and as our Secretary since April 1997. From May 1994 to March 1997, he served as
Secretary  and General  Counsel of  AAF-McQuay,  Inc. From January 1990 to April
1994, Mr. Weaver served as Assistant  General Counsel of AAF-McQuay,  Inc., then
known as Snyder General Corporation.

     Fredric J. Klink has been a director of our company since April 1995. Since
December 31,  2001,  Mr. Klink has been "of counsel" at the law firm of Dechert.
Prior  thereto he was a partner  at the law firm of  Dechert  for more than five
years.  Mr.  Klink's law  practice  concentrates  on mergers  and  acquisitions,
securities,  and  international  work.  He received his LL.B.  from Columbia Law
School in 1960.

     O. Thomas  Albrecht has been a director of our company  since May 10, 2002.
Mr.  Albrecht was  employed by the  McDonald's  Corporation  from 1977 until his
retirement  in March  2001.  Most  recently,  from 1995 until  March  2001,  Mr.
Albrecht  served as a Senior  Vice  President  and Chief  Purchasing  Officer of
McDonald's Corporation.

     Charles Macaluso has been a director of our company since May 10, 2002. Mr.
Macaluso was a founding  principal of East Ridge Consulting,  Inc., a management
consulting  and  corporate   advisory   service  firm  focusing  on  operational
assessment,  strategic  planning and workouts,  from 1998 to 2000.  From 1996 to
1998,  he was a partner  at  Miller  Associates,  Inc.,  a  workout,  turnaround
partnership focusing on operational assessment, strategic planning and workouts.
Mr.  Macaluso is currently a director of  Elder-Beerman  Stores  Corp.  (NASDAQ:
EBSC),  where he serves on the  Executive  Committee  and the Audit and  Finance
Committee,  and formerly served on the Compensation Committee. Mr. Macaluso also
serves as a director of the following privately-held companies: NCH NuWorld Ltd.
(Chairman),  Crescent Public Telephone, Inc. (Chairman),  Prime Succession, Inc.
(Chairman), and Lazy Days RV Centers, Inc.

     Richard A.  Peterson has been a director of our company since May 10, 2002.
Mr.  Peterson has been the managing  principal of Peterson & Associates,  a firm
specializing  in financial  restructuring  and  strategic  advisory  services to
management  and  directors of distressed  companies,  a firm he founded in April
2001.  Prior  thereto,  Mr.  Peterson was a senior vice  president  and regional
manager in the managed assets  department of Bank One, NA, from April 1999 until
his  retirement in April 2001.  From the Fall of 1998 until April 1999, he was a
first vice president and regional  manager in the managed  assets  department of
Bank One, N.A.; and he held the same position with Bank One, N.A.'s  predecessor
First  National  Bank of  Chicago,  from  1995  until  the Fall of 1998.  He was
employed by First  National Bank of Chicago from October 1981 to 1995 in various
capacities in the "workout and turnaround" group for large corporate credits.

Compensation of Directors

     Non-employee  members of the Board of Directors  are paid a $25,000  annual
retainer. Each outside director receives $1,500 for each board meeting or $1,000
for each committee meeting personally  attended,  or $500 if a committee meeting
is  attended  before  or after a board  meeting,  and  $750  for  each  board or
committee meeting attended by telephone.

     Under the Non-Employee  Directors Stock Option Plan, prior to May 17, 2000,
each  outside  director was granted an option to purchase  15,000  shares of our
common stock on the tenth business day of July 1995 and was granted an identical
option on the tenth business day of July of each year  thereafter.  Each outside
director  elected  after  July 1995 but prior to May 17,  2000,  was  granted an
option to  purchase  21,000  shares of our common  stock on the day he was first
elected by our  stockholders as a member of the Board of Directors.  Pursuant to
an amendment to the Non-Employee  Directors Stock Option Plan adopted on May 17,
2000, each outside  director elected on or after May 17, 2000 is granted options
to buy 4,000 shares of our common stock when he is first elected to the Board of
Directors by our stockholders.  Thus, on May 10, 2002, each of Messrs. Albrecht,
Macaluso and  Peterson,  upon his election to our Board of Directors was granted
options  to  purchase  4,000  shares of our  common  stock.  On the date of each
calendar  year  thereafter on which our  independent  auditors sign their annual
audit report,  options to purchase  4,000 shares of our common stock are granted
under the Non-Employee Directors Stock Option Plan to

                                       34



each of our directors, but such grants occur only if we obtain 90% of our target
EBITDA for the year of such director's election. The per share exercise price of
each option granted under the Non-Employee  Directors Stock Option Plan is equal
to the fair market  value per share of our common  stock on the date of grant of
the options relating thereto.  Twenty-five percent of the shares subject to each
option vest on the date that is six months  following  the date of grant and 25%
of the shares vest on each of the first,  second and third  anniversaries of the
date of grant thereafter.  Options to purchase an aggregate of 450,000 shares of
our common stock may be granted under the  Non-Employee  Directors  Stock Option
Plan.

     If while  unexercised  options remain  outstanding  under the  Non-Employee
Directors  Stock Option Plan,  any of the following  events  occur,  all options
granted under the Non-Employee Directors Stock Option Plan become exercisable in
full, whether or not they are otherwise exercisable:

     o   any entity other than us makes a tender or exchange offer for shares of
         our common stock pursuant to which purchases are made,

     o   our stockholders approve a definitive agreement to merge or consolidate
         our  company  with  or  into  another  corporation  or to  sell  all or
         substantially all of our assets or adopt a plan of liquidation,

     o   the beneficial  ownership of securities  representing  more than 15% of
         the combined voting power of our company is acquired by any person, or

     o   during any period of two consecutive  years, the individuals who at the
         start of such period were  members of the Board of  Directors  cease to
         constitute at least a majority thereof, unless the election of each new
         director was approved by a vote of at least two-thirds of the directors
         then still in office who were directors at the start of such period.

     In the case of a  merger  where we are the  surviving  entity  and in which
there is a reclassification of the shares of our common stock, each option shall
become  exercisable  for the  kind  and  amount  of  shares  of  stock  or other
securities receivable upon such reclassification or merger. Upon consummation of
the Recapitalization, all options granted under the Non-Employee Directors Stock
Option  Plan  became  exercisable  in full,  whether or not they were  otherwise
exercisable.

     No options were granted under the Non-Employee  Directors Stock Option Plan
during fiscal 2001 because we did not achieve 90% of our targeted EBITDA for the
fiscal year ended December 30, 2000.

Executive Compensation

     The following table sets forth certain  information  with respect to annual
and long-term compensation for services in all capacities for fiscal years 2001,
2000 and 1999 paid to our five most highly  compensated  executive  officers who
were serving as such at December 29, 2001.




                                              SUMMARY COMPENSATION TABLE
                                                                                     

                                                                                      Long-Term
                                                      Annual Compensation           Compensation
                                                      -------------------           ------------
                                                                                      Number of
                                                                                     Securities
               Name and                                                              Underlying         All Other
          Principal Position              Year        Salary          Bonus            Options         Compensation
          ------------------              ----        ------          -----            -------         ------------

Denis J. Taura                            2001     $  700,000(1)           --                 --               --
   Chairman and Chief Executive           2000        520,000(2)           --          1,080,000(5)      $  13,200(3)
     Officer                              1999             --              --             15,000(6)        328,007(4)

James A. Ransweiler                       2001        307,500         $30,000             90,000(7)            --
   President and Chief Operating          2000        300,000                                 --               --
     Officer                              1999        258,000                                 --               --

John O. Muse                              2001        216,924          20,000             45,000(7)            --
   Executive Vice President - Finance     2000        197,693              --                 --               --
     and Administration                   1999        185,000              --                 --               --


                                       35


Neil Katchen                              2001        200,000          20,000            73,800(7)            --
   Executive Vice President -             2000        195,000              --                --               --
     Operations                           1999        178,460              --                --               --

Mitchell Kilanowski                       2001        164,000          10,000            45,000(7)            --
   Executive Vice                         2000        160,000              --                --               --
     President -Marketing and Research    1999        160,000           3,333             5,000(8)            --





    ---------------------

    (1)  Of this amount, $180,000 represents additional salary paid to Mr. Taura
         as compensation for extensive  additional time spent on company matters
         during  fiscal  2001.  Mr.  Taura's  current  salary for fiscal 2002 is
         $520,000.  Upon  the  consummation  of the  Recapitalization  Agreement
         effective as of May 10, 2002, Mr. Taura was retained as a consultant to
         our company and the remaining  portion of Mr.  Taura's  salary for 2002
         will be paid to Taura Flynn & Associates,  LLC, of which Mr. Taura is a
         principal,  for  services to be provided to our company by Mr. Taura as
         Chief Executive Officer pursuant to a consulting agreement. Mr. Taura's
         entry into the  consulting  agreement was a condition  precedent to the
         consummation of the Recapitalization Agreement.

    (2)  Of this amount,  $130,000 represents compensation paid to Taura Flynn &
         Associates,  LLC,  of which  Mr.  Taura is a  principal,  for  services
         provided  to our  company  by Mr.  Taura  as  Chief  Executive  Officer
         pursuant to a loan-out  agreement.  Effective March 15, 2000, Mr. Taura
         became an employee of our company.  Mr. Taura does not  participate  in
         any of our employee benefit plans.

    (3)  $13,200 represents payments of management  consulting fees and expenses
         to Taura Flynn &  Associates,  LLC, of which Mr.  Taura is a principal,
         for services provided to us.

    (4)  Amount represents  payments of management  consulting fees and expenses
         to Taura Flynn & Associates, LLC, of which Mr. Taura is a principal. Of
         this amount, $148,007 represented fees and expenses during 1999 related
         to  management  consulting  services  provided to us prior to Mr. Taura
         serving as Chief Executive  Officer and $180,000 was paid pursuant to a
         loan-out  agreement  in  connection  with Mr.  Taura  serving  as Chief
         Executive Officer.

    (5)  Amount  represents (i) options to purchase 540,000 shares of our common
         stock  granted March 15, 2000 and ratified by  shareholders  on May 17,
         2000;  and (ii)  options  granted on  December  13, 2000 to purchase an
         additional 540,000 shares of Common Stock.

    (6)  Pursuant to the Directors  Plan on the tenth  business day of July each
         year,  15,000  options  were  granted  to Mr.  Taura as a  non-employee
         director prior to him serving as Chief Executive Officer.

    (7)  On May 16, 2001, our stockholders  authorized the Board of Directors to
         grant under the 1994 Plan on or after June 4, 2001  options to purchase
         735,355 shares of our common stock at 100% of fair market value on such
         date to key  employees  who  surrendered  an equal number of options on
         December 1, 2000. On June 5, 2001,  options to purchase  703,385 shares
         of our common  stock  were  issued to such key  employees  at $0.50 per
         share.

    (8)  Mr.  Kilanowski  surrendered  such  options on  December  1, 2001.  See
         footnote 7 above.

     On October 29, 2001,  Omar A.  Dreiling,  who had been our Vice President -
Western Region, resigned and the responsibility for our rendering operations was
reorganized.  Mr.  Katchen has been  appointed  Executive  Vice  President  with
responsibility  for all of our rendering plants.  Effective January 1, 2002, the
salaries of Messrs.  Ransweiler,  Muse and Katchen  were  increased to $335,000,
$240,000 and $220,000, respectively.

Option Grants

     On June 5, 2001,  options under the 1994 Plan to purchase  90,000,  45,000,
73,800,  and 45,000 shares of our common stock at $0.50 per share were issued to
Messrs.  Ransweiler,  Muse, Katchen and Kilanowski,  respectively,  each of whom
surrendered an equal number of options on December 1, 2000. See "--Stock  Option
Plans--1994  Plan"  below.  No other  options  were  granted by us to any of the
executive  officers  named in the summary  compensation  table above  during the
fiscal year ended December 29, 2001.

                                       36



Option Exercises and Year-End Options Values

     The following table sets forth certain  information with respect to options
exercised  during  the  fiscal  year  ended  December  29,  2001  by each of the
executive  officers named in the summary  compensation table above and the value
of unexercised options held by such executive officers at December 29, 2001:



              AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                         FISCAL YEAR-END OPTION VALUES

                                                                                 
                      Options Exercised in Fiscal 2001   Number of Securities Underlying  Value of Unexercised In-
                                                            Underlying Unexercised at       the-Money Options at
                          Shares                               December 29, 2001              December 29, 2001
                        Acquired on                             Exercisable (E)                Exercisable (E)
                         Exercise     Value Realized           Unexercisable (U)             Unexercisable(U)(1)
                     ---------------------------------------------------------------------------------------------
Denis J. Taura              --            --                     1,202,250(E)                   $81,000 (E)
                                                                     3,750(U)                         0 (U)
James A. Ransweiler         --            --                       182,832(E)                     2,700 (E)
                                                                    72,000(U)                    10,800 (U)
John O. Muse                --            --                         9,000(E)                     1,350 (E)
                                                                    36,000(U)                     5,400 (U)
Neil Katchen                --            --                        14,760(E)                     2,214 (E)
                                                                    59,040(U)                     8,856 (U)
Mitchell Kilanowski         --            --                         9,000(E)                     1,350 (E)
                                                                    36,000(U)                     5,400 (U)


(1)  Based on the  difference  between the closing  price of our common stock on
     December 29, 2001 ($0.650 per share) and the exercise price of the option.

Severance Agreements

     We entered into severance agreements with Messrs. Taura, Ransweiler,  Muse,
Dreiling,  Katchen and Kilanowski which provide,  subject to certain conditions,
for  severance  compensation  equal to one year's  compensation  to the  officer
(except that in Mr. Taura's case, severance  compensation is equal to two years'
base  compensation)  in the event of a termination  of the officer's  employment
unless  such  termination  is  voluntary  or based  upon cause as defined in the
agreement.  Mr.  Dreiling's  employment  has  terminated  and he is receiving an
aggregate of $195,000 in severance payments,  to be paid in monthly installments
commencing November 2001. The  Recapitalization  constituted a change of control
under the terms of Mr. Taura's severance agreement.  Pursuant to an amendment to
the  severance  agreement  that was  entered  into as a condition  precedent  to
closing of the  Recapitalization,  such payments will be payable in  twenty-four
equal monthly  installments,  commencing on May 13, 2002; provided,  that if any
time  after  that  date (i) Mr.  Taura  ceases  to be a member  of our  Board of
Directors,  or (ii) a change of control occurs, all remaining payments under the
severance agreement will become immediately due and payable.

Stock Option Plans

     1993  Plan.  The  Board of  Directors  has  suspended  the 1993 Plan and no
further  options  are to be  issued  under  such  plan.  Officers  and other key
employees of Darling were  eligible to receive  options  under the 1993 Plan. In
December 1993, we granted options covering  1,483,500 shares of our common stock
to seven members of our management pursuant to the 1993 Plan. The exercise price
of these options is $2.857 per share.  These  options  vested 20% on the date of
grant and vest 20% on each anniversary date thereof.  All options under the 1993
Plan have  fully  vested.  The  options  granted  pursuant  to the 1993 Plan are
intended to be incentive stock options to the maximum extent  permissible  under
the Internal Revenue Code of 1986, as amended and nonqualified  stock options to
the extent not incentive  stock options.  184,066 of the shares covered by these
options  were  transferred  to the 1994 Plan  prior to the  three-for-one  stock
split,  pursuant to shareholder  approval at the annual meeting of  stockholders
held May 20, 1997.

     1994 Plan. Our compensation committee may grant options under the 1994 Plan
to officers and other key employees of Darling.  The purpose of the 1994 Plan is
to attract,  retain and motivate  officers and key  employees,  and to encourage
them to have a financial interest in our company. In 1994, 500,000 options, each
to buy one share of our  common  stock,  were  authorized  for the 1994 Plan and
pursuant to stockholder  approval at the annual meeting of stockholder  held May
20,  1997,  184,066  options  forfeited  or  canceled  under  the 1993 Plan were
authorized  as  additional  options  available  for grant  under the 1994  Plan.
Therefore,  after  the  effect  of the  three-for-one  stock  split,  a total of
2,052,198 options were authorized to be granted under the 1994 Plan. Pursuant to
stockholder  approval at the annual meeting of  stockholders  held May 27, 1998,
500,000  additional options were authorized for the 1994 Plan bringing the total
authorized to be granted under the 1994 Plan to 2,552,198  options.  Pursuant to
stockholder


                                       37



approval at the annual meeting of stockholders  held May 17, 2000, the number of
authorized  shares  under the 1994 Plan were  reduced  from  2,552,198 to 20% on
2,012,198  shares.  Options granted pursuant to the 1994 Plan typically vest the
date  of  grant  and 20% on  each  anniversary  date  thereof.  Pursuant  to the
acceleration  provisions  of the 1994 Plan  relating to change of control,  upon
consummation  of the  Recapitalization,  all options granted under the 1994 Plan
became  exercisable  in full,  whether or not they were  otherwise  exercisable,
except that the options  granted on June 5, 2001,  as described  below,  did not
accelerate upon consummation of the Recapitalization.

     Under the 1994 Plan,  stock  options are awarded  based on an  individual's
level of  responsibility  within his or her area,  such  individual's  executive
development  potential and competitive  market norms.  Options granted under the
1994 Plan are granted at 100% of the fair market  value of the stock on the date
of grant. During fiscal 2001, 703,385 options were granted under the 1994 Plan.

     On May 16,  2001,  our  stockholders  authorized  the Board of Directors to
grant under the 1994 Plan on or after June 4, 2001  options to purchase  735,355
shares  of our  common  stock at 100% of fair  market  value on such date to key
employees  who  surrendered  an equal number of options on December 1, 2000.  On
June 5, 2001, options to purchase 703,385 shares of our common stock were issued
to such key employees at $0.50 per share.

     Non-Employee  Directors  Stock  Option  Plan.  For  a  description  of  the
Non-Employee  Directors  Stock Option Plan,  see the  disclosure set forth above
under "--Compensation of Directors."

Annual Incentive Plan

     Our annual incentive plan is administered by our compensation committee and
provides incentive cash bonuses to corporate and regional  executives.  In 2001,
the annual incentive plan was tied to plan components comprised of actual levels
achieved for EBITDA,  collection/service  charge  revenue,  operating  expenses,
safety goals,  raw material  procurement and individual  initiatives.  Incentive
earned under each component is calculated  independently of the other components
and is expressed in terms of a percentage of base salary.

Pension Plan Table

     The following table  illustrates  the  approximate  annual pension that the
executive officers named in the summary compensation table above (other than Mr.
Taura) would receive under the Salaried  Employee's  Retirement Plan if the plan
remains  in effect  and such  executive  officers  retired  at age 65.  However,
because  of  changes  in the tax laws or  future  adjustments  to  benefit  plan
provisions,  actual pension benefits could differ significantly from the amounts
set forth in the table.

                                         Estimated Annual Pension
                           ------------------------------------------------
                                           (Years of Service)
  Average Annual Salary
  During the Last 5 Years    15       20         25        30        35
---------------------------------------------------------------------------

       $150,000           $40,500   $54,000   $67,500   $71,250   $75,000
        175,000            47,250    63,000    78,750    83,125    87,500
        200,000            54,000    72,000    90,000    95,000   100,000
        235,840            63,677    84,902   106,128   112,024   117,920


     The above  amounts do not reflect the  compensation  limitations  for plans
qualified under the Internal Revenue Code,  effective January 1, 1994. Effective
January 1, 2000, annual  compensation in excess of $170,000  ($235,840 for 1993)
is not taken into account when  calculating  benefits under the Retirement Plan.
Such limitation will not, however, operate to reduce plan benefits accrued as of
December 31, 1993.

     If the executive  officers  named in the summary  compensation  table above
(other than Mr. Taura) remain  employees of our company until they reach age 65,
the  years of  credited  service  for  Messrs.  Ransweiler,  Muse,  Katchen  and
Kilanowski will be as follows: Ransweiler, 24 years; Muse, 16 years; Katchen, 40
years; and Kilanowski, 40 years.

     The Retirement Plan is a non-contributory  defined benefit plan. Office and
supervisory  employees,  not covered under another  plan,  automatically  become
participants  in the  plan on the  earlier  of  January  1 or  July 1  following
completion of 1,000 hours of service in a consecutive  twelve-month period. Upon
meeting the eligibility  requirement,  employees are recognized as a participant
from the  date of  commencement  of their  service  with our  company.  Eligible
employees  become fully vested in their benefits after  completing five years of
service. Benefits


                                       38



under the plan are calculated on "average monthly pay" based upon the highest 60
consecutive  months of the  latest 120 months  (and  subject to the  limitations
discussed above) and the years of service completed.

     The basic pension benefit is equal to 45% of the employee's average monthly
pay,  reduced  proportionally  for years of  service  less  than 25  years.  The
multiple is  increased  0.5% per year for years of service in excess of 25 years
to a maximum of 15 additional years.
















                                       39


                      REPORT OF THE COMPENSATION COMMITTEE

     The following  report of the  compensation  committee  and the  performance
graph  that  appears  immediately  after such  report  shall not be deemed to be
soliciting  material or to be filed with the Securities and Exchange  Commission
under  the  Securities  Act of 1933 or the  Securities  Exchange  Act of 1934 or
incorporated by reference in any document so filed.

     Our executive compensation program is designed to attract, motivate, reward
and retain the executive officers needed to achieve our business objectives,  to
increase our profitability and to provide value to our stockholders. The program
has  been  structured  and  implemented  to  provide  competitive   compensation
opportunities  and various  incentive  awards  based on company  and  individual
performance.  Our executive  compensation program is composed of three principal
components:  base salary,  short term  incentive  awards and long term incentive
awards.

Base Salaries

     The base salaries of the executive officers of our company are set forth in
the summary  compensation  table located above. The base salary of Mr. Taura was
established and reviewed by the compensation committee.  Executive positions are
grouped by grades which are part of our company's overall salary structure.  The
base  salaries of senior  executives,  except those  established  by  employment
agreements,  are  reviewed to  determine if  adjustment  is  necessary  based on
competitive  practices  and economic  conditions.  Salaries are adjusted  within
grade  ranges  based on  individual  performance  and changes in job content and
responsibilities.

Short Term Incentive Awards

     The  short-term   program,   or  Annual  Incentive  Plan,  consists  of  an
opportunity  for the award of an annual  incentive cash bonus in addition to the
payment of base salary.  In 2001,  our Annual  Incentive  Plan for corporate and
division  executives  was tied to plan  components  comprised  of actual  levels
achieved for EBITDA,  collection/service  charge  revenue,  operating  expenses,
safety goals,  raw material  procurement and individual  initiatives.  Incentive
earned under each component is calculated  independently of the other components
and is expressed in terms of a percentage of base salary.

     In fiscal 2001, our company met the predetermined threshold established for
the  payment of cash  incentive  awards to all  employees  participating  in the
Annual Incentive Plan. Under the Annual  Incentive Plan,  senior  executives are
entitled to receive annual bonuses of up to 60% of their base salaries.

Long Term Incentive Awards

     In connection with a financial  restructuring of our company consummated in
December  1993,  long term  incentive  awards in the form of stock  options were
granted to  certain of our  executive  officers  under the 1993 Plan.  In Fiscal
1997, the Board of Directors  suspended the 1993 Plan and no further options are
to be issued under such plan.

     Under the 1994 Plan,  stock  options are awarded  based on an  individual's
level of  responsibility  within his or her area,  such  individual's  executive
development  potential and competitive  market norms.  Options granted under the
1994 Plan are granted at 100% of the fair market  value of the stock on the date
of grant.

March 14, 2002

                                Fredric J. Klink
                                Dennis B. Longmire *
                                Bruce Waterfall *

*    Mr.  Longmire and Mr.  Waterfall did not stand for re-election to our Board
     of Directors  at our 2002 annual  meeting of  stockholders  held on May 10,
     2002.  Effective  May 10,  2002,  our  compensation  committee  consists of
     Messrs. Klink (Chairman), Albrecht, Macaluso and Peterson.









                                       40


               COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     Section 16(a) of the Securities  Exchange Act of 1934, as amended  requires
our  directors  and  executive  officers  and any  persons who own more than ten
percent of our common stock to file with the Securities and Exchange  Commission
various reports as to ownership of such common stock.  Such persons are required
by Securities  and Exchange  Commission  regulation to furnish us with copies of
all Section 16(a) forms they file. To our knowledge,  based solely on our review
of the copies of such  reports  furnished  to us, the  aforesaid  Section  16(a)
filing requirements were met on a timely basis during 2001.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Mr.  Taura has  served  as our  Chairman  of the Board and Chief  Executive
Officer since August 1999. Mr. Taura is a partner in the  management  consulting
firm Taura Flynn & Associates, LLC. Prior to Mr. Taura becoming our employee, he
served as our Chairman of the Board and Chief Executive  Officer  pursuant to an
agreement between Taura,  Flynn & Associates and us. Pursuant to such agreement,
we  paid  Taura,  Flynn  and  Associates   $130,000  during  Fiscal  2000.  Upon
consummation of the Recapitalization Agreement effective as of May 10, 2002, Mr.
Taura was retained as a consultant to serve as our Chairman and Chief  Executive
Officer  pursuant to an agreement  between  Taura,  Flynn &  Associates  and us.
Instead of paying Mr. Taura as a salaried employee during the remainder of 2002,
we are paying Taura, Flynn & Associates an equivalent amount for his services.

     Fredric J. Klink,  one of our  directors,  was a partner in the law firm of
Dechert until  December 31, 2001 when he became "of counsel" at Dechert.  We pay
Dechert fees for the performance of various legal services.











                                       41



                                PERFORMANCE GRAPH


         Set forth below is a line graph  comparing the change in the cumulative
total stockholder return on our company's common stock with the cumulative total
return  of the  Nasdaq  Stock  Market - U.S.  Index,  the Dow  Jones  Industrial
Pollution Control/Waste Management Index, and the CSFB-Nelson Agribusiness Index
for the period from  December  28,  1996 to  December  29,  2001,  assuming  the
investment of $100 on December 28, 1996 and the reinvestment of dividends.

         The stock price performance shown on the graph only reflects the change
in  our  company's  stock  price  relative  to  the  noted  indices  and  is not
necessarily indicative of future price performance.

                      COMPARISON OF CUMULATIVE TOTAL RETURN
                              DARLING COMMON STOCK
                            NASDAQ STOCK MARKET- U.S.
          DOW JONES INDUSTRIAL POLLUTION CONTROL/WASTE MANAGEMENT INDEX
                         CSFB-NELSON AGRIBUSINESS INDEX



                                 [GRAPH OMITTED]


                                                                                          

----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
                                       Dec. 28,       Jan. 3,       Jan. 2,       Jan. 1,      Dec. 30,      Dec. 29,
                                         1996           1998          1999         2000          2000          2001
----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
Darling International Inc.               100             88            32            22            1              2
----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
Dow Jones Industrial Pollution
Control/Waste Management Index           100            109           114            63           89            102
----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
CSFB - Agribusiness Index                100            124           128           108          131            158
----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
NASDAQ Stock Market - US                 100            123           173           321          193            152
----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------



         Our common stock first became  eligible for trading on the Nasdaq Stock
Market on September  8, 1994.  On  September  12,  1997,  our common stock began
trading on the American  Stock  Exchange and ceased  trading on the Nasdaq Stock
Market.


                                       42





         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


Security Ownership of Certain Beneficial Owners

         The  following  table  and notes set  forth  certain  information  with
respect to the beneficial ownership of shares of our common stock, as of May 13,
2002,  by each  person or group  within  the  meaning  of Rule  13d-3  under the
Exchange Act who is known to our management to be the  beneficial  owner of more
than five percent of our outstanding  common stock and is based upon information
provided to us by such  persons.



                                                                               Amount and
                                                                                Nature of
                                                                               Beneficial              Percent
Name and Address of Beneficial Owner                                          Ownership (1)           of Class
------------------------------------                                          -------------           --------
                                                                                                

Phoenix Partners..........................................                      260,940                    *
Betje Partners............................................                       91,152                    *
Phaeton B.V.I.............................................                      182,349                    *
Morgens Waterfall Income Partners.........................                      233,187                    *
Morgens, Waterfall, Vintiadis & Company, Inc..............                      273,501 (2)                *
Restart Partners L.P......................................                      884,193                    1.4%
Restart Partners II, L.P..................................                    1,746,980                    2.8%
Restart Partners III, L.P.................................                    1,445,937                    2.3%
Restart Partners IV, L.P..................................                      900,369                    1.5%
Restart Partners V, L.P...................................                      150,000                    *
MWV Employee Retirement Plan Group Trust..................                       96,619                    *
Endowment Restart, L.L.C..................................                    1,266,775                    2.0%
Edwin H. Morgens..........................................                    7,161,882 (3)               11.5%
Bruce Waterfall ..........................................                    7,261,882 (4)               11.6%
(collectively, the "Morgens, Waterfall Group")
Morgens, Waterfall Group (5)..............................                    7,358,501 (6)               11.8%

Credit Lyonnais New York Branch (7).......................                    4,359,141                    7.0%
Daple, S.A./PPM America Special Investments CBO II, L.P./
    PPM America Special Investments Fund, L.P. (8)........                   17,902,607                   28.8%
Bank One N.A. (9).........................................                    6,434,923                   10.3%
Credit Agricole Indosuez (10).............................                    2,075,782                    3.3%
Wells Fargo Bank (Texas) National Association (11)........                          363                    *
Ark CLO 2000-1, Limited (12)..............................                    1,037,891                    1.7%
Cerberus Partners, L.P. (13)..............................                    8,355,849                   13.4%
Avenue Special Situations Fund II L.P. (14)...............                    6,538,530                   10.5%
(collectively, the "Lenders")
The Lenders (15)                                                             46,705,086                   75.0%
------------------------------
*      Less than 1%



(1)  Except as  otherwise  indicated  in  footnotes  2, 3, 4 and 6, the entities
     named in this table have sole voting and  investment  power with respect to
     all shares of capital stock shown as beneficially owned by them.

(2)  Morgens  Waterfall  Vintiadis & Company,  Inc. does not directly own any of
     the common  stock or options  described  in footnote 6 but may be deemed to
     indirectly  beneficially  own 273,501 shares of our common stock,  assuming
     exercise of the options,  by virtue of contracts  with Phaeton  B.V.I.  and
     Betje  Partners  pursuant to which Morgens  Waterfall  Vintiadis & Company,
     Inc. provides investment advisory services.

(3)  Edwin H.  Morgens does not have direct  beneficial  ownership of the common
     stock or options  described  in  footnote  5. Mr.  Morgens may be deemed to
     indirectly  beneficially own 7,161,882 shares of our common stock, assuming
     exercise  of the  options  described  in the  second  to last  sentence  of
     footnote 6, by virtue of his  positions  as  managing  member of each of MW
     Management,  L.L.C.,  MW Capital,  L.L.C. and Endowment Prime,  L.L.C.,  as
     general partners of Phoenix Partners and Morgens  Waterfall Income Partners
     and managing member of Endowment Restart, L.L.C., respectively; as Chairman
     of the Board of Directors  and Secretary of Morgens  Waterfall  Vintiadis &
     Company,  Inc.;  as Chairman of the Board of  Directors  and  Secretary  of
     Prime,  Inc., as general partner of each of Prime Group,  L.P., Prime Group
     II, L.P.,  Prime Group III,  L.P.,  Prime Group IV, L.P. and Prime Group V,
     L.P., as general  partners of Restart  Partners L.P.,  Restart Partners II,
     L.P.,  Restart  Partners III, L.P.,  Restart  Partners IV, L.P. and Restart
     Partners V, L.P., respectively.


                                       43



(4)  Bruce  Waterfall  has direct  beneficial  ownership  of options for 100,000
     shares,  all of  which  are  presently  exercisable.  He may be  deemed  to
     indirectly  beneficially own 7,161,882 shares of our common stock, assuming
     exercise of the options  described  in the last  sentence of footnote 6, by
     virtue  of his  positions  as  managing  member  of each of MW  Management,
     L.L.C., MW Capital, L.L.C. and Endowment Prime, L.L.C., as general partners
     of Phoenix  Partners  and Morgens  Waterfall  Income  Partners and managing
     member of Endowment Restart, L.L.C., respectively; as President,  Assistant
     Secretary and a Director of Morgens Waterfall Vintiadis & Company, Inc.; as
     President and a Director of Prime, Inc. as general partner of each of Prime
     Group,  L.P.,  Prime Group II, L.P., Prime Group III, L.P., Prime Group IV,
     L.P. and Prime Group V, L.P., as general partners of Restart Partners L.P.,
     Restart Partners II, L.P., Restart Partners III, L.P., Restart Partners IV,
     L.P. and Restart Partners V, L.P., respectively.

(5)  The address for each member of the Morgens, Waterfall Group is 10 East 50th
     Street, New York, New York 10281.

(6)  Includes  options,  which are  immediately  exercisable,  in the  following
     amounts for each entity:  Phoenix Partners (6,498 options);  Betje Partners
     (2,322 options);  Phaeton B.V.I. (4,620 options);  Morgens Waterfall Income
     Partners (7,014 options);  Restart Partners L.P. (26,603 options);  Restart
     Partners II, L.P.  (52,562  options);  Restart  Partners III, L.P.  (43,500
     options);   Restart  Partners  IV,  L.P.  (27,087  options);  MWV  Employee
     Retirement  Plan Group Trust (1,680  options);  Endowment  Restart,  L.L.C.
     (38,114  options),  Edwin  H.  Morgens  may  be  deemed  to  have  indirect
     beneficial  ownership  of  208,320  options.  Bruce  Waterfall  has  direct
     beneficial  ownership  of  100,000  options,  all of  which  are  presently
     exercisable,  and may be deemed to have indirect beneficial ownership of an
     additional 208,320 options.

(7)  The  address  for Credit  Lyonnais  New York  Branch is 1301  Avenue of the
     Americas, New York, NY 10019.

(8)  PPM  America  Special  Investments  Fund,  L.P.  ("SIF I") and PPM  America
     Special  Investments  CBO II, L.P.  ("CBO II") are each  investment  funds.
     Daple, S.A. ("Daple") is a special purpose entity formed for the purpose of
     investing  on a pro rata basis  with each of SIF I and CBO II. PPM  America
     Fund  Management  GP,  Inc.  ("SIF I GP")  serves as the  managing  general
     partner  of SIF I. PPM  America  CBO II  Management  Company  ("CBO II GP")
     serves as the  general  partner of CBO II. PPM MGP  (Bermuda),  Ltd.  ("PPM
     Bermuda")  serves as the general  partner of CBO II GP. PPM  America,  Inc.
     ("PPM America") serves as investment  manager/adviser  to each of SIF I and
     CBO II. PPM America also serves as the investment  adviser to Daple and PPM
     Bermuda serves as the special  investment manager to Daple. The address for
     SIF I, SIF I GP, CBO II, and CBO II GP is 225 West Wacker Drive, Suite 975,
     Chicago,  Illinois  60606,  the  address for PPM America is 225 West Wacker
     Drive, Suite 1200, Chicago, Illinois 60606, and the address for PPM Bermuda
     is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. Each of SIF I,
     SIF I GP, CBO II, CBO II GP, and PPM America is organized under the laws of
     the State of Delaware.  PPM Bermuda is organized under the laws of Bermuda.
     Daple is a company  incorporated  with limited  liability under the laws of
     Luxembourg.

     For purposes of determining  beneficial ownership of shares of common stock
     pursuant to Rule 13d-3  promulgated  under the  Securities  Exchange Act of
     1934, as amended, (i) SIF I is the legal and beneficial owner of 10,522,770
     shares  of common  stock  (the  "SIF I  Securities")  and none of the SIF I
     Securities  are owned  directly or  indirectly  by SIF I GP or PPM America,
     (ii) CBO II is the legal and beneficial owner of 6,659,897 shares of common
     stock (the "CBO II Securities") and none of the CBO II Securities are owned
     directly or indirectly by CBO II GP, PPM Bermuda or PPM America,  and (iii)
     PPM America and PPM Bermuda are the beneficial  owners of 719,940 shares of
     common stock  registered in the name of Daple (the "Daple  Securities") due
     to the  fact  that  Daple  has  delegated  all of its  power to vote and to
     acquire and dispose of the Daple Securities to PPM America and PPM Bermuda.
     SIF I, SIF I GP and PPM  America  share  voting and  investment  power with
     respect to the SIF I  Securities,  CBO II, CBO II GP, PPM  Bermuda  and PPM
     America  share  voting  and  investment  power  with  respect to the CBO II
     Securities,  and PPM America and PPM Bermuda  share  voting and  investment
     power  with  respect  to the  Daple  Securities.  SIF I GP and PPM  America
     disclaim  beneficial  ownership of the SIF I Securities  and CBO II GP, PPM
     Bermuda  and  PPM  America  disclaim  beneficial  ownership  of the  CBO II
     Securities.

(9)  The address for Bank One N.A. is 1 Bank One Plaza, Chicago, IL 60670.

(10) The address for Credit Agricole Indosuez is 666 Third Avenue,  New York, NY
     10017.

(11) The address  for Wells  Fargo Bank  (Texas)  National  Association  is 1000
     Louisiana, 4th Floor, Houston, TX 77002.

                                       44


(12) Patriarch Partners,  LLC, as Collateral Manager of Ark CLO 2000-1, Limited,
     has the power to direct the voting and  disposition of the common stock and
     Series A Preferred Stock of Darling owned by Ark CLO 2000-1,  Limited,  and
     Lynn Tilton and Dennis Dolan, as the Managers of Patriarch  Partners,  LLC,
     also have the power to direct the voting and  disposition  of such  shares.
     The  address for Ark CLO  2000-1,  Limited is Ark CLO  2000-1,  Limited c/o
     JPMorgan Chase Bank, 600 Travis Street, 50th Floor, Houston, TX 77002.

(13) Based on information in a Schedule 13D filed by Stephen Feinberg on May 22,
     2002,  Mr.  Feinberg  possesses  the  sole  power to vote  and  direct  the
     disposition  of all  8,355,849  shares of common  stock of Darling  held by
     Cerberus  Partners,  L.P. and thus may be deemed to  beneficially  own such
     shares.  The address for Cerberus Partners,  L.P. is 450 Park Avenue,  28th
     Floor, New York, NY 10022.

(14) The  address  for Avenue  Special  Situations  Fund II L.P.  is 535 Madison
     Avenue, 15th Floor, New York, NY 10022.

(15) Pursuant to the  Recapitalization,  the Lenders,  acquired in the aggregate
     75% of our common stock. We have been advised, however, that the Lenders do
     not  have  and do  not  expect  to  have  any  contracts,  arrangements  or
     understandings  to vote as a group for the  election of directors or on any
     other  issue or to hold or  dispose  of  their  common  stock  or  Series A
     Preferred Stock.


Security Ownership of Management

         The  following  table  and notes set  forth  certain  information  with
respect to the beneficial ownership of shares of our common stock, as of May 13,
2002, by each director, each executive officer and by all executive officers and
directors as a group:




                                                         Former                          Common Stock    Percent of
                                             Common      Class A       Unexercised       Beneficially      Common
Name of Individual                        Stock Owned  Options (1)  Plan Options (2)       Owned (3)     Stock Owned
------------------                        -----------  -----------  ----------------     ------------    -----------
                                                                                          

Denis J. Taura (4)                             30,000       30,000         1,176,000       1,236,000            2.0%
Fredric J. Klink                               90,000            0           100,000         190,000               *
O. Thomas Albrecht                                  0            0                 0               0               *
Charles Macaluso                                    0            0                 0               0               *
Richard A. Peterson                                 0            0                 0               0               *
James A. Ransweiler                             5,000            0           200,832         205,832               *
Joseph R. Weaver, Jr.                               0            0            14,040          14,040               *
John O. Muse                                    7,500            0            18,000          25,500               *
Neil Katchen                                    5,000            0            29,520          34,520               *
Mitch Kilanowski                                3,500            0            18,000          21,500               *
Gilbert L. Gutierrez                            1,300            0             9,120          10,420               *
All executive officers and directors
as a group (11 persons)                       142,300       30,000         1,565,512       1,737,812            2.7%


------------------

*    Represents less than one percent of our common stock outstanding.

(1)  These Class A options were  canceled and the numbers  represent  options to
     purchase shares of our common stock.

(2)  Represents  options  that are or will be vested and  exercisable  within 60
     days of May 13, 2002.

(3)  Except as otherwise  indicated in the columns  "Former Class A Options" and
     footnote 1 and "Unexercised Plan Options" and footnote 2 and in footnote 4,
     the persons named in this table have sole voting and investment  power with
     respect to all shares of capital stock shown as beneficially owned by them.

(4)  "Common Stock  Beneficially  Owned" includes 540,000 options granted to Mr.
     Taura on March 15, 2000 and an additional  540,000  options  granted to Mr.
     Taura on December 13, 2000.



                                       45


                     DESCRIPTION OF SENIOR CREDIT AGREEMENT


The Senior Credit Agreement

         On May 13, 2002,  the new amended and  restated  credit  agreement  was
consummated  and  provides for a total of $17.3  million of  borrowing  capacity
under a revolving credit facility and $61.0 million of borrowings through a term
loan  plus  allows  us to  continue  to have  our  existing  letters  of  credit
outstanding until its expiration date. In connection with the  Recapitalization,
$55.4  million  principal  amount of loans under our  previous  credit  facility
(together with $5.3 million of accrued and unpaid  interest and commitment  fees
payable under our previous  credit  facility and the $3,855,000  forbearance fee
payable under a forbearance agreement) were cancelled. In consideration for such
cancellation we issued to the lenders  46,705,086 shares of our common stock and
100,000 shares of Series A Preferred Stock. See "Recapitalization" for a summary
description of the terms of the Recapitalization.

Terms of the Revolving Credit Facility

         Our senior credit  agreement  includes a revolving  credit facility for
loans and  letters  of credit in the  amount  of $17.3  million,  of which  $0.4
million of loans and three  letters of credit in the face  amounts of  $750,000,
$2.35 million and $7.2 million, respectively, are issued and outstanding.

         Maturity. Borrowings under the revolving credit facility, together will
all  accrued  and unpaid  interest  on  borrowings  under the  revolving  credit
facility,  will mature on May 10, 2007. The revolving credit facility may not be
cancelled  or  terminated  by us  unless  the  term  loan  has  been  or will be
contemporaneously repaid in full.

         Ranking. The revolving credit facility will share a first priority lien
with the term loan on  substantially  all of our assets (subject only to certain
permitted liens); provided, however, that all obligations and indebtedness under
the revolving  credit facility will be repaid prior to those under the term loan
in the application of any payments  received after the occurrence and during the
continuance of an event of default under our senior credit agreement.

         Interest;  Fees. Interest will accrue on borrowings under the revolving
credit  facility at our election at either (i) 30, 60, or 90 day LIBOR plus 5.0%
per annum,  payable on the last day of each such LIBOR interest period,  or (ii)
Credit  Lyonnais New York  Branch's  Prime Rate plus two percent 2.0% per annum,
floating with an unused  commitment fee of 0.50% per annum and a facility fee of
1.50% per annum,  with such  prime rate  interest,  unused  commitment  fees and
facility fees being payable quarterly on the last day of the third full calendar
month  occurring  after  May 10,  2002  and the  last  day of each  third  month
thereafter  and on the  maturity  date.  As of May 13, 2002,  the interest  rate
payable on borrowings  under the revolving  credit  facility was 6.75% per annum
(Credit Lyonnais New York Branch's prime rate plus 2%).

         Letter of credit  fees  payable to the  lenders are 3% per annum on the
face amount of each letter of credit  outstanding,  payable on quarterly payment
dates in arrears plus a 0.125% per annum  "fronting fee" paid to Credit Lyonnais
New York  Branch as Agent  (for its own  account)  as  issuer of such  letter of
credit.

         Conversion.  Borrowings under the revolving credit facility will not be
convertible into our capital stock.

Terms of the Term Loan

         Our  senior  credit  agreement  includes  a term loan in the  principal
amount of $61.0 million.

         Maturity;  Payment  of  Principal  and Other  Amounts.  The term  loan,
together will all accrued and unpaid  interest on the term loan,  will mature on
May 10, 2007.

         The  principal  balance  of the term loan is  required  to be repaid in
installments  due  quarterly on the last day of each third full  calendar  month
occurring  after May 10,  2002:  (i)  $300,000  will be due on each of the first
eight quarterly payment dates, and (ii) $1,200,000 will be due on each quarterly
payment  date  thereafter,  with a final  payment  in the  amount of the  entire
remaining  principal  balance and all accrued and unpaid interest  thereon being
due and payable on the maturity  date. In addition,  to the regularly  scheduled
principal and interest  payments,  we will make additional  payments on the term
loan to the  extent  of (i) 25% for 2002,  (ii) 35% for 2003,  and (iii) 50% for
each year  thereafter  of excess cash flow  (defined  generally as EBITDA,  less
scheduled  principal and interest  payments on the revolving credit facility and
the Term Loan and permitted  capital  leases,  plus or minus as applicable,  any
changes in adjusted  working  capital,  less cash taxes paid,  less any required
payments made under


                                       46





non-compete  agreements,  less permitted capital  expenditures up to $10,800,000
for 2002 (increasing by 5% per year thereafter)),  which shall be calculated and
due annually, such payments to be applied in inverse order of maturity.

         Ranking.

         The term loan shares a first  priority lien with the  revolving  credit
facility  on  substantially  all of our  assets  (with  the  exception  that all
obligations and indebtedness  under the revolving credit facility will be repaid
prior to those under the term loan in the  application of any payments  received
after the occurrence and during the continuance of an event of default under our
senior credit agreement).

         Interest.  The term loan bears  interest at our  election at either (i)
30,  60, or 90 day LIBOR  plus 5.0% per  annum,  payable on the last day of each
such LIBOR interest period,  or (ii) the Credit Lyonnais New York Branch's prime
rate plus 2.0% per annum, floating,  payable quarterly and on the maturity date.
As of May 13,  2002,  the  interest  rate payable on the term loan was 6.75% per
annum.

         Conversion.  Borrowings under the term loan are not be convertible into
our capital stock.


                                       47





                          DESCRIPTION OF CAPITAL STOCK


General

         Our  authorized  capital stock consists of 100 million shares of common
stock, par value $0.01 per share, and one million shares of preferred stock, par
value  $0.01  per  share,  on a pro  forma  basis  after  giving  effect  to the
recapitalization of our company described under the section "Recapitalization."

         The  following  description  of our  capital  stock is a summary of the
material terms of such capital  stock.  The  description  does not purport to be
complete  and is subject to and  qualified  in its  entirety by reference to our
restated  certificate  of  incorporation,  as amended,  and amended and restated
bylaws, as amended, and to applicable Delaware law.

Common Stock

         As of May 13, 2002,  there were  62,273,448  shares of our common stock
issued and outstanding and 100,000 shares of Series A Preferred Stock issued and
outstanding.  3,727,538  shares of common stock have been  reserved for issuance
under our stock option plans.

         The holders of our common  stock are entitled to dividends as our Board
of Directors may declare from funds legally available  therefor,  subject to the
preferential rights of the holders of our preferred stock,  including our Series
A Preferred  Stock. The holders of our common stock are entitled to one vote per
share on any matter to be voted upon by  shareholders.  In  connection  with the
Recapitalization,  the lenders under our senior credit agreement, the holders of
46,705,086  shares  of our  common  stock,  were  granted  preemptive  rights to
subscribe  for shares of our common stock issued in the future.  No other holder
of our common  stock has any  preemptive  right to  subscribe  for any shares of
capital stock issued in the future.

         Upon any voluntary or involuntary liquidation,  dissolution, or winding
up of our affairs, the holders of our common stock are entitled to share ratably
in all  assets  remaining  after  payment  of  creditors  and  subject  to prior
distribution  rights of our  preferred  stock,  if any.  All of the  outstanding
shares of our common stock are fully paid and non-assessable.

Preferred Stock

         Our restated  certificate of incorporation,  as amended,  provides that
our Board of Directors may by resolution  issue  preferred  stock in one or more
classes or series and fix the  designations,  powers,  preferences and rights of
the shares of each class or series, including dividend rates, conversion rights,
voting rights, terms of redemption and liquidation  preference and the number of
shares constituting each class or series.

         Series A Preferred Stock

         In  connection  with  the  Recapitalization,  our  Board  of  Directors
authorized  the  issuance of 100,000  shares of Series A Preferred  Stock to the
Lenders.  The Series A Preferred Stock ranks senior (with respect to liquidation
payments)  to our common  stock and any  preferred  stock we issue in the future
unless otherwise  approved by the holders of 66 2/3 of the outstanding shares of
the Series A Preferred Stock.

         The  complete  text  of  the  proposed   Certificate   of   Designation
establishing  the rights and  preferences  of the  Series A  Preferred  Stock is
attached as Annex A to the Definitive  Proxy  Statement we filed with the SEC on
April  29,  2002.  We urge you to read the  Certificate  of  Designation  in its
entirety.

         Dividends.  Dividends on the Series A Preferred Stock  accumulates at a
rate of 6% per annum on the original issue price of $100 per share. Dividends on
the Series A Preferred Stock are cumulative from the issue date,  whether or not
declared,   and  accrue  semi-annually  and  may  be  either  paid  in  cash  or
accumulated, at our election. If accumulated, the dividends will be added to the
original issue price, and dividends will thereafter accrue on the original issue
price as so adjusted.  Our senior credit agreement,  however,  prohibits us from
paying  dividends  in cash so long as any  indebtedness  or  commitments  remain
outstanding under the revolving credit facility or the term loan.

         Liquidation Preference. Upon any liquidation, dissolution or winding up
of our company,  each holder of Series A Preferred  Stock will be entitled to be
paid,  before any  distribution  or payment is made to the holders of our common
stock,  the sum of the original  issue price of $100 per share plus  accumulated
dividends  and  accrued  and  unpaid  dividends  not  yet  accumulated.  We  are
prohibited from issuing any other preferred stock with a liquidation  preference
equal to or greater than the Series A Preferred Stock.


                                       48





         Conversion Rights. The Series A Preferred Stock will not be
convertible.

         Mandatory Redemption.  The Series A Preferred Stock will be mandatorily
redeemable upon the earliest to occur of:

         o    a change of control of our company,

         o    a sale of all or substantially all of our consolidated assets,

         o    a dissolution or liquidation of our company, and

         o    May 10, 2007

to the extent we have legally  available  funds, at a redemption  price equal to
the  aggregate  original  issue  price  of  the  shares  to  be  redeemed,  plus
accumulated  dividends and accrued and unpaid  dividends not yet  accumulated to
the date of redemption.

         This represents a significant  future liability.  We cannot assure you,
however, that our business will generate sufficient cash flow from operations or
that future borrowings will be available to us under our senior credit agreement
in an amount sufficient to enable us to redeem the Series A Preferred Stock when
required to do so.

         For purposes of the  mandatory  redemption  provisions  of the Series A
Preferred Stock, a change of control shall be deemed to occur when:

         o    any  "person"  (as  such  term  is used in  Section  13(d)  of the
              Securities  Exchange  Act of 1934,  as  amended),  other  than the
              Lenders  and their  respective  affiliates,  individually  or as a
              group,  becomes a  "beneficial  owner" (as such term is defined in
              Rule 13d-3 and Rule 13d-5  under the  Exchange  Act),  directly or
              indirectly,  of more  than 50% of the  total  voting  power of our
              outstanding capital stock,

         o    the first day on which a majority  of the  members of our Board of
              Directors are not  "continuing  directors"  (defined as any member
              who (i) was a  member  of the  Board of  Directors  on the date of
              issuance of the Series A Preferred  Stock,  (ii) was nominated for
              election by the Lenders in  accordance  with the  Recapitalization
              Agreement,  or (iii) was nominated or elected by a majority of the
              continuing  directors  who  were  members  at  the  time  of  such
              nomination or election), or

         o    our company  consolidates with, or merges with or into, any person
              or entity or any  person or entity  consolidates  with,  or merges
              with or into, our company,  pursuant to a transaction in which any
              of our  outstanding  voting  capital  stock is  converted  into or
              exchanged for cash, securities or other property.

         Optional  Redemption.  Subject  to the  prior  payment  in  full of all
indebtedness outstanding under our senior credit agreement, we may redeem shares
of Series A  Preferred  Stock in  multiples  of not less than $1  million at any
time,  upon 30  days  notice,  at a  redemption  price  equal  to the  aggregate
liquidation preference of the shares to be redeemed,  plus accumulated dividends
and accrued and unpaid  dividends not yet accumulated to the date of redemption.
If less than all shares of Series A Preferred Stock are to be redeemed, they are
required  to be  redeemed  pro-rata  based on the  number  of shares of Series A
Preferred Stock owned.

         Voting Rights.  Except as required by the Delaware General  Corporation
Law, the Series A Preferred Stock will be non-voting.

         Section  203  of  the  Delaware   General   Corporation   Law;  Certain
Anti-Takeover, Limited Liability and Indemnification Provisions

         Section 203 of the Delaware General Corporation Law

         The  following is a description  of certain  provisions of the Delaware
General  Corporation  Law, and our restated  certificate  of  incorporation,  as
amended,  and amended and  restated  bylaws,  as amended.  This summary does not
purport to be complete  and is  qualified  in its  entirety by  reference to the
Delaware General Corporation Law, and our restated certificate of incorporation,
as amended, and amended and restated bylaws, as amended.

         We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 of the Delaware General Corporation Law prohibits a
publicly held  Delaware  corporation  from engaging in a "business  combination"
with an "interested  shareholder"  for a period of three years after the date of
the transaction in which the person became an "interested  shareholder,"  unless
the business combination is approved in a prescribed manner.


                                       49





A "business  combination"  includes  certain  mergers,  asset  sales,  and other
transactions  resulting in a financial benefit to the "interested  shareholder."
Subject to certain  exceptions,  an  "interested  shareholder"  is a person who,
together with  affiliates and  associates,  owns, or within the past three years
did own, 15% of the corporation's voting stock.

         Certain  provisions of our restated  certificate of  incorporation,  as
amended,  and amended and restated bylaws,  as amended could have  anti-takeover
effects.  Our restated certificate of incorporation,  as amended,  provides that
our Board of Directors may issue preferred stock without  shareholder  approval.
The issuance of preferred  stock could make it more  difficult for a third-party
to acquire us without the approval of our board.

         Indemnification

         We have  included in our  restated  certificate  of  incorporation,  as
amended and amended and restated bylaws, as amended  provisions to (i) eliminate
the personal  liability of our directors  for monetary  damages  resulting  from
breaches of their fiduciary duty to the extent permitted by the Delaware General
Corporation  Law and (ii)  indemnify  our  directors and officers to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law.

Transfer Agent and Registrar

         The  Transfer  Agent and  Registrar  for our common  stock is EquiServe
Trust Company,  N.A. The Transfer Agent's address is Blue Hills Office Park, 150
Royall Street, Canton, MA 02021 and its telephone number is 781.575.3400.


                                       50





                              SELLING STOCKHOLDERS


         The common stock and Series A Preferred  Stock offered hereby are being
registered to permit public secondary  trading of such  securities,  and each of
the selling  stockholders may offer the securities for resale from time to time.
See "Plan of Distribution." The number of shares of common stock and/or Series A
Preferred  Stock that may actually be sold by each selling  stockholder  will be
determined by such selling stockholder. Because each of the selling stockholders
may sell all,  some or none of the shares of common stock and Series A Preferred
Stock  covered by this  prospectus  which each holds,  and because the  offering
contemplated  by this prospectus is not being  underwritten,  no estimate can be
given as to the  number of shares of common  stock or Series A  Preferred  Stock
that will be held by the selling  stockholders upon termination of the offering.
Shares of common  stock and  Series A  Preferred  Stock may be sold from time to
time by the selling  stockholders or by pledgees,  donees,  transferees or other
successors  in interest.  The selling  stockholders  may also loan or pledge the
shares registered  hereunder to broker-dealers  and the  broker-dealers may sell
the  shares  so loaned or upon a default  may  effect  the sales of the  pledged
shares pursuant to this prospectus.

         The following  table sets forth  information  known to us as of May 13,
2002, with respect to the beneficial  ownership of each Credit Lyonnais New York
Branch,  PPM America Special  Investments Fund, L.P.,  Daple,  S.A., PPM America
Special Investments CBO II, L.P., Bank One N.A., Credit Agricole Indosuez, Wells
Fargo Bank  (Texas)  National  Association,  Ark CLO 2000-1,  Limited,  Cerberus
Partners,  L.P., and Avenue Special  Situations Fund II L.P. of our common stock
and Series A  Preferred  Stock  before and after  completion  of the sale of the
securities to be sold by each under this  prospectus.  The  information is based
upon the assumption  that the selling  stockholder  does not sell any securities
shown in the table as  beneficially  owned other than the  securities to be sold
under this prospectus and that the selling stockholder sells all such securities
offered  under this  prospectus.  We have  determined  beneficial  ownership  in
accordance with the rules of the SEC.

         Except in connection with the Recapitalization and in their capacity as
our lenders under our previous and our new senior credit  facility,  none of the
selling  stockholders  has held any  position  or  office,  or has had any other
material  relationship  with us or any of our  affiliates  within the past three
years, other than as a result of the ownership of our securities.

         Information concerning the selling stockholders may change from time to
time. This  prospectus will be supplemented  from time to time as appropriate to
update the  information  set forth below and to identify any additional  selling
stockholders  who may offer shares of common  stock or Series A Preferred  Stock
hereunder.


                                       51








-------------------------------------------------------------------------------------------------------------------
                                                           Common Stock               Series A Preferred Stock
-------------------------------------------------------------------------------------------------------------------
           Name of Selling Stockholder                 Shares        Shares             Shares        Shares
                                                        Owned        Offered            Owned         Offered
-------------------------------------------------------------------------------------------------------------------
                                                                                        

Credit Lyonnais New York Branch                        4,359,141     4,359,141             9,333         9,333
-------------------------------------------------------------------------------------------------------------------
PPM America Special Investments Fund, L.P.            10,522,770    10,522,770            22,531        22,531
-------------------------------------------------------------------------------------------------------------------
Daple, S.A.                                              719,940       719,940             1,541         1,541
-------------------------------------------------------------------------------------------------------------------
PPM America Special                                    6,659,897     6,659,897            14,259        14,259
   Investments CBO II, L.P.
-------------------------------------------------------------------------------------------------------------------
Bank One N.A.                                          6,434,923     6,434,923            13,778        13,778
-------------------------------------------------------------------------------------------------------------------
Credit Agricole Indosuez                               2,075,782     2,075,782             4,444         4,444
-------------------------------------------------------------------------------------------------------------------
Wells Fargo Bank (Texas) National Association                363           363                 1             1
-------------------------------------------------------------------------------------------------------------------
Ark CLO 2000-1, Limited                                1,037,891     1,037,891             2,222         2,222
-------------------------------------------------------------------------------------------------------------------
Cerberus Partners, L.P.                                8,355,849     8,355,849            17,891        17,891
-------------------------------------------------------------------------------------------------------------------
Avenue Special Situations Fund II L.P.                 6,538,530     6,538,530            14,000        14,000
-------------------------------------------------------------------------------------------------------------------




         We have agreed to bear certain  expenses  (other than broker  discounts
and commissions, if any) in connection with the registration of the securities.


                                       52




                              PLAN OF DISTRIBUTION


         We will not receive any of the  proceeds of the sale of the  securities
offered hereby.  We are registering for resale by the selling  stockholders  and
certain  transferees a total of up to 46,705,086  shares of our common stock and
100,000  shares of our  Series A  Preferred  Stock,  all of which are issued and
outstanding.

         The  selling  stockholders  may pledge or grant a security  interest in
some or all of the shares of common  stock or Series A Preferred  Stock owned by
them and, if they default in the performance of their secured  obligations,  the
pledgees  or secured  parties  may offer and sell the shares of common  stock or
Series A  Preferred  Stock from time to time  pursuant to this  prospectus.  The
selling  stockholders also may transfer and donate the shares of common stock or
Series A Preferred Stock in certain circumstances in which case the transferees,
donees,  pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus.

         The common  stock and Series A Preferred  Stock  offered  hereby may be
sold from time to time by the selling  stockholders or, to the extent permitted,
by pledgees,  donees,  transferees  or other  successors  in interest.  All or a
portion of the common stock and Series A Preferred  Stock offered by the selling
stockholders  may be disposed  of from time to time in one or more  transactions
through any one or more of the following means:

         o    by the purchasers directly;

         o    in ordinary  brokerage  transactions and transactions in which the
              broker solicits purchasers;

         o    through  underwriters  or dealers who may receive  compensation in
              the form of underwriting  discounts,  concessions,  or commissions
              from the  selling  stockholders  or such  successors  in  interest
              and/or  from the  purchasers  of the  common  stock  and  Series A
              Preferred Stock for whom they may act as agent;

         o    by the  writing  of  options  on the  common  stock  and  Series A
              Preferred Stock;

         o    by the pledge of the common stock and Series A Preferred  Stock as
              security for any loan or obligation,  including pledges to brokers
              or  dealers  who  may,  from  time  to  time,   themselves  effect
              distributions  of the common stock and Series A Preferred Stock or
              interests therein;

         o    through purchases by a broker or dealer as principal and resale by
              such broker or dealer for its own account;

         o    through  a block  trade in which the  broker or dealer so  engaged
              will attempt to sell the common stock and Series A Preferred Stock
              as agent but may  position  and  resell a portion  of the block as
              principal to facilitate the transaction; and

         o    by an exchange  distribution  in accordance with the rules of such
              exchange or transactions in the over the counter market.

         Such  sales may be made at prices and at terms  then  prevailing  or at
prices  related to the then  current  market price or at  negotiated  prices and
terms.

         In  addition,   the  selling   stockholders   may  enter  into  hedging
transactions with broker-dealers or other financial  institutions,  which may in
turn  engage in short  sales of the common  stock in the  course of hedging  the
positions  they assume.  The selling  shareholders  may also engage in the short
sale of the common  stock  and/or  Series A Preferred  Stock and may deliver the
common  stock  and/or  Series A  Preferred  Stock to cover  short  positions  or
otherwise settle short sale transactions.

         In  effecting  sales by the  selling  stockholders,  brokers or dealers
engaged by the selling  stockholders may arrange for other brokers or dealers to
participate.  Brokers or dealers  participating in such transactions may receive
commissions  or discounts  from the selling  stockholders  (and,  if they act as
agent for the purchaser of such securities,  from such purchaser).  In addition,
underwriters  or  agents  may  receive  compensation  in the form of  discounts,
concessions or commissions, from the selling stockholders or from the purchasers
of the  securities  sold by the  selling  stockholders  for whom they may act as
agents. Underwriters may sell shares of common stock or Series A Preferred Stock
to or through  dealers,  who may receive  compensation in the form of discounts,
concessions  or  commissions  from  the  underwriters  or  commissions  from the
purchasers as the purchaser's  agents. The selling  stockholders,  underwriters,
brokers,  dealers,  and agents that  participate  in the sale of the  securities
covered by this prospectus may be deemed to be "underwriters" within the meaning
of the Securities Act in connection  with such sales.  To the extent the selling
stockholders may be deemed to be underwriters,  the selling  stockholders may be


                                       53




subject to certain statutory  liabilities of the Securities Act, including,  but
not  limited to,  Sections  11, 12 and 17 of the  Securities  Act and Rule 10b-5
under the Exchange  Act. In addition and without  limiting  the  foregoing,  the
selling  stockholders  will be subject to applicable  provisions of the Exchange
Act, and the rules and regulations  thereunder,  including,  without limitation,
Regulation  M, which  provisions  may limit the timing of purchases and sales of
the  shares  of  common  stock  and  Series A  Preferred  Stock  by the  selling
stockholders.

         At the time a  particular  offer  and  sale of  securities  under  this
prospectus is made, to the extent  required  under the  Securities  Act, we will
file a supplemental prospectus, disclosing:

         o    the name of any such broker-dealers;

         o    the number of shares of common stock and Series A Preferred  Stock
              involved;

         o    the  price at which  such  shares of  common  stock  and  Series A
              Preferred Stock are to be sold;

         o    the commissions  paid or discounts or concessions  allowed to such
              broker-dealers, where applicable;

         o    that such  broker-dealers  did not  conduct any  investigation  to
              verify the  information  set out or  incorporated  by reference in
              this prospectus, as supplemented; and

         o    other facts material to the transaction.

         The   Registration   Rights   Agreement   provides  that  we  will  pay
substantially  all of the expenses  incident to the  registration,  offering and
sale of the shares of common  stock and Series A Preferred  Stock by the selling
stockholders,   other  than   underwriting   discounts  and   commissions.   The
Registration  Rights  Agreement also provides that we will indemnify the selling
stockholders  against  certain  liabilities,  including  liabilities  under  the
Securities Act.

         Any shares of common stock and Series A Preferred Stock covered by this
prospectus  that qualify for sale pursuant to Rule 144 of the Securities Act may
be sold under that rule rather than  pursuant to this  prospectus.  We cannot be
sure that any of the selling  stockholders will sell any or all of the shares of
common stock and Series A Preferred Stock offered by them under this prospectus.


                                       54





                    MATERIAL U.S. FEDERAL TAX CONSIDERATIONS


         The following  discussion  summarizes  certain  material  United States
federal income tax considerations  generally applicable to holders acquiring the
common stock and the Series A Preferred  Stock as capital  assets,  but does not
purport  to be a complete  analysis  of all  potential  tax  consequences.  This
discussion is based on the Internal  Revenue Code of 1986, as amended,  Treasury
Regulations issued thereunder,  and judicial and administrative  authorities now
in effect,  all of which are subject to change.  Any such changes may be applied
retroactively  in a manner  that could  adversely  affect a holder of the common
stock or Series A Preferred Stock.

         The tax  treatment  of a holder of common  stock or Series A  Preferred
Stock may vary depending on his or her particular  situation or status.  Certain
holders   (including   S   corporations,    insurance   companies,    tax-exempt
organizations,   financial   institutions,   regulated   investment   companies,
broker-dealers,  taxpayers subject to alternative minimum tax or persons holding
the common stock or Series A Preferred Stock as part of a "straddle," "hedge" or
"conversion  transaction")  may be subject to special rules not discussed below.
The following  discussion does not consider all aspects of United States federal
income tax that may be relevant to the purchase,  ownership,  and disposition of
the common  stock or Series A Preferred  Stock by such holder in light of his or
her personal  circumstances.  In addition, the description does not consider the
effect of any applicable foreign, state, local, or estate or gift taxes.

         Because individual circumstances may differ, each prospective purchaser
of our common  stock or Series A Preferred  Stock is urged to consult his or her
own tax advisor with respect to his or her own  particular  tax situation and as
to any federal, foreign, state, local or other tax considerations (including any
possible changes in the tax law) affecting the purchase, holding and disposition
of our common stock or Series A Preferred Stock.

Disposition of the Securities

         Unless  a  nonrecognition   provision  applies,   the  sale,  exchange,
redemption or other disposition of common stock or Series A Preferred Stock will
be treated as the  disposition  of a capital asset and taxable for U.S.  federal
income tax  purposes.  In such event,  in general,  a holder of common  stock of
Series A  Preferred  Stock  will  recognize  capital  gain or loss  equal to the
difference between (i) the amount of cash plus the fair market value of property
received  and (ii)  the  holder's  tax  basis in the  common  stock or  Series A
Preferred  Stock.  If the common stock or Series A Preferred Stock has been held
for more than one year,  such gain or loss  will be  long-term  capital  gain or
loss. The deductibility of capital losses may, however, be limited.  See "Series
A Preferred Stock--Tax Aspects of Redemption Features" below for a discussion of
circumstances under which a redemption may be treated as a dividend distribution
rather than as the disposition of a capital asset.

Dividend Treatment

         Dividends on the common stock or Series A Preferred Stock, whether paid
in cash or in other  property,  will be taxable to the holder as ordinary income
to the extent that the cash amount,  or fair market value of the other  property
on the date of distribution,  does not exceed Darling's  current and accumulated
earnings and profits (as determined for federal income tax purposes). The amount
of our  company's  earnings  and profits at any  particular  time depends on our
future actions and financial  performance.  To the extent that the amount of any
distribution  exceeds our current and  accumulated  earnings  and  profits,  the
distribution  will be treated as a return of  capital,  thus  reducing  (but not
below zero) the holder's adjusted tax basis in such outstanding  common stock or
Series A Preferred  Stock.  The amount of any such excess  distribution  that is
greater  than the  holder's  adjusted  tax basis in the common stock or Series A
Preferred Stock will be taxed as capital gain and will be long-term capital gain
if the holder's holding period for such common stock or Series A Preferred Stock
exceeds one year.

         Dividends Received Deduction

         To the extent that dividends are treated as ordinary income,  dividends
received   by   corporate   holders   generally   will  be   eligible   for  the
dividends-received  deduction  under  section 243 of the Internal  Revenue Code.
There  are,   however,   many  exceptions  and  restrictions   relating  to  the
availability of such dividends-received deduction, such as restrictions relating
to (i) the holding  period of the stock on which the  dividends are sought to be
deducted,  (ii)  debt-financed  portfolio  stock,  (iii)  dividends  treated  as
"extraordinary  dividends" for purposes of section 1059 of the Internal  Revenue
Code,  discussed in  "Extraordinary  Dividends"  below, and (iv) the alternative
minimum  tax.  Corporate  stockholders  should  consult  their  own tax  advisor
regarding the extent,  if any, to which such  exceptions  and  restrictions  may
apply to their particular factual situations.


                                       55



         Extraordinary Dividends

         An "extraordinary dividend," as defined in section 1059 of the Internal
Revenue  Code,  includes any dividend that (i) equals or exceeds five percent of
the holder's  adjusted tax basis in the Series A Preferred Stock (ten percent of
the  holder's  basis  in  the  common  stock),  treating  all  dividends  having
ex-dividend  dates  within an 85-day  period as one  dividend,  or (ii)  exceeds
twenty percent of the holder's  adjusted tax basis in the common stock or Series
A Preferred  Stock,  treating all dividends  having  ex-dividend  dates within a
365-day period as one dividend.  In  determining  whether a dividend paid on the
common stock or Series A Preferred Stock is an extraordinary  dividend, a holder
may elect to use the fair market  value of such stock  rather than its  adjusted
basis for purposes of determining the percent  limitations if the holder is able
to  establish  to the  satisfaction  of the  Secretary  of the Treasury the fair
market  value of the  common  stock or  Series A  Preferred  Stock as of the day
before the ex-dividend date.

         If a corporate holder receives an "extraordinary dividend" from Darling
with  respect to common  stock or Series A Preferred  Stock that it has not held
for more  than two years on the  dividend  announcement  date,  the basis of the
common stock or Series A Preferred Stock will be reduced (but not below zero) by
the non-taxed portion of the dividend. If, because of the limitation on reducing
basis  below  zero,  any amount of the  non-taxed  portion  of an  extraordinary
dividend  has not been applied to reduce  basis,  such amount will be treated as
gain from the sale or exchange of the common  stock or Series A Preferred  Stock
in the year in which the  extraordinary  dividend is  received.  Generally,  the
non-taxed  portion of an  extraordinary  dividend  is the amount  excluded  from
income as a dividends-received deduction.

         Certain  "qualified  preferred  dividends" are generally not considered
extraordinary  dividends.  A qualified  preferred dividend is any fixed dividend
payable with respect to  preferred  stock that (i) provides for fixed  preferred
dividends  payable not less  frequently than annually and (ii) is not in arrears
as to dividends when acquired and (ii) the actual rate of return does not exceed
15%. If the actual rate of return, as determined under section 1059(e)(3) of the
Internal  Revenue Code, on such preferred  stock does not exceed fifteen percent
and the holder has held the preferred  stock for more than five years,  then any
qualified  preferred  dividend  as to such  stock  will not be an  extraordinary
dividend.  However,  if the actual rate of return is less than fifteen  percent,
and the holder sells the qualified  preferred  stock before  holding it for more
than five years,  then some of the dividend will be treated as an  extraordinary
dividend, but only to the extent to which the qualified preferred dividends paid
exceed the qualified  preferred  dividends that would have been paid during such
period on the basis of the stated rate of return.

         The Internal Revenue Code specifies that in certain cases extraordinary
dividend  treatment  will be required  without  regard to holding  periods or to
whether a dividend  qualifies as a qualified  preferred  dividend.  The Internal
Revenue Code  requires  that an  extraordinary  dividend will include any amount
treated as a dividend in the case of a redemption  of the common stock or Series
A Preferred  Stock that is (i) non-pro  rata as to all  holders,  (ii) part of a
partial  liquidation  of our company,  or (iii) that would not have been treated
(in  whole or in part)  as a  dividend  if (a) any  stock  options  had not been
counted toward stock  ownership  pursuant to the  attribution  rules of Internal
Revenue Code section 318 or (b) section  304(a)  (dealing with the sale of stock
by a controlling person among brother-sister corporations) had not been applied.
See "Series A Preferred  Stock--Tax  Aspects of Redemption  Features"  below for
additional  discussion  of the  application  of section  1059 in the  redemption
context.

Series A Preferred Stock--Tax Aspects of Redemption Features

         The Series A Preferred Stock is subject to mandatory  redemption on the
fifth anniversary of the closing date of the Recapitalization.  In addition, the
Series A Preferred  Stock is redeemable by us at any time upon 30 days notice at
a redemption price equal to the aggregate  liquidation  preference of the shares
to be  redeemed,  plus  accrued  and unpaid  dividends,  if any,  to the date of
redemption. See "Description of Capital Stock" above. Pursuant to section 305(c)
of the  Internal  Revenue  Code,  holders  of  Series A  Preferred  Stock may be
required  to treat a portion of the  difference  between  the Series A Preferred
Stock's issue price and its redemption  price as constructive  distributions  of
property  includable in income on a periodic basis.  For purposes of determining
whether  such  constructive   distribution   treatment  applies,  the  mandatory
redemption  and the  optional  redemption  are tested  separately.  Constructive
distribution  treatment  is  required  if  either  (or  both) of these  tests is
satisfied.

         Section  305(c) of the Internal  Revenue Code  provides that the entire
amount of a redemption  premium with respect to preferred  stock that is subject
to mandatory  redemption is treated as being  distributed to the holders of such
preferred  stock on an  economic  accrual  basis  over the  period  the stock is
outstanding.  Preferred  stock  generally  is  considered  to have a  redemption
premium for this purpose if the redemption price exceeds its issue price by more
than a de minimis amount. For this purpose,  such excess will be treated as zero
if it is less than 1/4 of 1% of the redemption price multiplied by the number of
complete years from the date of issuance of the stock until the

                                       56





stock must be redeemed.  The Series A Preferred  Stock  provides for  cumulative
preferred dividends. Thus, the redemption price will depend on whether dividends
on such stock are paid  currently.  If all of the cumulative  dividends are paid
currently,  the  redemption  price will equal the issue price.  The  legislative
history of Internal  Revenue Code Section  305(c)  states that if at the time of
issuance of cumulative  preferred stock there is "no intention" for dividends to
be paid  currently,  the IRS may treat such dividends as a disguised  redemption
premium. Under that approach, the excess of the redemption price of the Series A
Preferred  Stock  (including  any disguised  redemption  premium) over its issue
price is taxable as  constructive  distributions  to the  holder  (treated  as a
dividend to the extent of our  company's  current and  accumulated  earnings and
profits  and   otherwise   subject  to  the   treatment   described   above  for
distributions)  over the term of the preferred  stock using a constant  interest
rate method similar to that for accruing  original issue discount.  To date, the
IRS has not  promulgated  such  regulations,  although the issue  remains  under
consideration.  In the  current  situation,  our  company  intends  to take  the
position  that we do not have  "no  intention"  of  paying  dividends  currently
(although the agreement  governing our senior credit agreement prohibits us from
paying any cash dividends while any indebtedness  remains outstanding under such
agreement)  and thus that holders of the Series A Preferred  Stock should not be
required to treat any excess of the final  redemption price over the issue price
as a  series  of  constructive  distributions  over  the  period  such  stock is
outstanding.  This issue is not, however,  free from doubt.  Holders of Series A
Preferred  Stock are urged to consult  their tax  advisors  with respect to this
issue.

         Constructive  distributions  on the Series A Preferred Stock will arise
on account of the optional redemption feature only if, based on all of the facts
and  circumstances  as of the  date  the  Series A  Preferred  Stock is  issued,
redemption pursuant to the optional redemption is more likely than not to occur.
Even  if the  redemption  were  more  likely  than  not to  occur,  constructive
distribution treatment would not result if the redemption premium were solely in
the nature of a penalty for premature  redemption.  For this purpose,  a penalty
for  premature  redemption  is a premium over which  neither our company nor the
holder has legal or practical  control,  such as changes in prevailing  dividend
rates.  Regulations promulgated pursuant to Internal Revenue Code section 305(c)
provide a safe harbor pursuant to which constructive distribution treatment will
not  result  from an issuer  call  right if (i) the  issuer  and the  holder are
unrelated, (ii) there are no arrangements that effectively require the issuer to
redeem the stock and (iii) exercise of the option to redeem would not reduce the
yield of the stock.  We do not believe  that the  optional  redemption  would be
treated as more likely than not to be exercised under these rules.

         A redemption of shares of Series A Preferred  Stock may be treated as a
dividend,  rather than as the  disposition of a capital asset,  to the extent of
our current or  accumulated  earnings  and profits  (as  determined  for federal
income  tax  purposes),  unless  the  redemption  (i)  results  in  a  "complete
termination"  of the  holder's  stock  interest  in our  company  under  section
302(b)(3)  of the  Internal  Revenue  Code,  (ii)  results  in a  "substantially
disproportionate"  redemption  of stock with respect to the holder under section
302(b)(2) of the Internal Revenue Code, or (iii) is "not essentially  equivalent
to a  dividend"  with  respect  to the holder  under  section  302(b)(1)  of the
Internal  Revenue Code. In  determining  whether the  redemption is treated as a
dividend,  the holder must take into  account not only stock he or she  actually
owns, but also stock he or she constructively owns within the meaning of section
318.

         A  distribution  to a holder will be "not  essentially  equivalent to a
dividend"  if it results  in a  "meaningful  reduction"  in the  holder's  stock
interest  in our  company.  For these  purposes,  a  redemption  of the Series A
Preferred Stock that results in a reduction in the proportionate interest in our
company  (taking into account any  ownership of the common stock and any Darling
stock that is constructively owned) of a holder whose relative stock interest is
minimal (an interest of less than one percent should  satisfy this  requirement)
and who  exercises no control  over  corporate  affairs  should be regarded as a
meaningful reduction in the holder's stock interest in Darling. See "Disposition
of  Securities"  above  for a  discussion  of the tax  consequences  of having a
redemption  treated as the sale or exchange of a capital asset and see "Dividend
Treatment"  above for the  consequences  of  having a  redemption  treated  as a
dividend distribution.

         Under  section  1059 of the  Internal  Revenue  Code,  as  discussed in
"Dividend  Treatment--Extraordinary  Dividends" above, an extraordinary dividend
includes any  redemption  of stock that is treated as a dividend that is non-pro
rata as to all  holders of our  stock,  including  holders of the common  stock,
irrespective of the holding period.  Consequently,  to the extent the redemption
of Series A Preferred  Stock  constitutes  a  dividend,  it will  constitute  an
extraordinary  dividend to a corporate holder. If the redemption is treated as a
dividend  because  options  are being  counted as stock  ownership  pursuant  to
Internal  Revenue Code section 318,  such holders are also required to recognize
gain  under  section  1059 of the  Internal  Revenue  Code with  respect  to any
redemption  treated  as a  dividend  (in  whole or in part)  when the  non-taxed
portion of the dividend exceeds the basis of the shares surrendered.


                                       57





Foreign Shareholders

         Dividends  received by a  nonresident  alien,  foreign trust or estate,
foreign  corporation,  or  foreign  partnership  in  respect  of the  Securities
generally  will be subject to withholding of United States federal income tax at
the rate of 30% (or lower treaty rate). If, however, the dividend is effectively
connected with the foreign  shareholder's  conduct of a trade or business within
the United States or, where a tax treaty  applies,  is attributable to a foreign
shareholder's  permanent  establishment  maintained  in the United  States,  the
dividend  will be  subject  to  federal  income  tax on a net  income  basis  at
applicable  graduated  individual or corporate rates and will be exempt from the
30% withholding tax. In addition,  dividends that are effectively connected to a
United States trade or business or  attributable  to a United  States  permanent
establishment may be subject to an additional "branch profits tax" at a 30% rate
(or lower treaty rate).

         Under currently applicable Treasury  regulations,  dividends paid to an
address  outside  the United  States may be presumed to be paid to a resident of
such country,  unless the payor has  knowledge to the contrary,  for purposes of
the withholding tax rates (including treaty rates) discussed above.

         For purposes of obtaining a reduced rate of withholding under an income
tax  treaty,  a  foreign   shareholder  will  be  required  to  provide  certain
information  concerning  his or her country of residence and  entitlement to tax
treaty  benefits.  If an  exemption  from  withholding  is claimed,  the foreign
shareholder must provide appropriate certification (for example, IRS Form W-8ECI
for foreign  individuals) to our company.  If a foreign  shareholder is eligible
for a  reduced  rate of United  States  federal  withholding  tax,  the  foreign
shareholder may obtain a refund of any excess withheld  amounts by timely filing
an appropriate claim for refund.

         Generally,  a foreign  shareholder will not be subject to United States
federal income tax on any gain recognized upon capital asset  disposition of the
common stock or Series A Preferred Stock. However, a foreign shareholder will be
subject  to  federal  income  tax on the  gain  if (i) the  gain is  effectively
connected with the foreign  shareholder's United States trade or business or, if
a tax treaty applies,  attributable to the foreign  shareholder's  United States
permanent establishment,  (2) if the foreign shareholder is an individual who is
a former  citizen of the  United  States  who lost such  citizenship  within the
preceding ten-year period, or former long-term resident of the United States who
relinquished  United States residency on or after February 6, 1995, and the loss
of citizenship or permanent  residency had as one of its principal  purposes the
avoidance  of  United  States  tax;  or  (iii)  the  foreign  shareholder  is  a
non-resident  alien individual who has been present in the United States for 183
days or more during the  taxable  year of the  disposition  and either (a) has a
"tax home" in the United States for United States federal income tax purposes or
(b) the gain is  attributable  to an office  or other  fixed  place of  business
maintained by the foreign shareholder in the United States.

         Because of the  complexity  of the  Internal  Revenue  Code  provisions
dealing  with the  taxation of foreign  shareholders  and the  possibility  that
treaty  provisions  may affect the  application  of such  Internal  Revenue Code
provisions,  foreign  shareholders  are urged to consult  their own tax advisors
with respect to the particular tax  consequences to them of an investment in our
company.

Backup Withholding

         We generally will be required to withhold  federal income tax at a rate
of 30% (in 2002 and 2003) from  dividends  paid and  redemption  proceeds to the
holders or common  stock or Series A Preferred  Stock if (i) the holder fails to
furnish us with the holder's  correct taxpayer  identification  number or social
security number and to make such certifications as we may require,  (ii) the IRS
notifies the holder or us that the holder has failed to report properly  certain
interest and dividend income to IRS and to respond to notices to that effect, or
(3) when  required  to do so, the  shareholder  fails to certify  that he is not
subject to backup withholding.  Any amounts withheld may be credited against the
shareholder's federal income tax liability.

         The foregoing  discussion of certain federal income tax  considerations
does not  consider the facts and  circumstances  of any  particular  prospective
purchaser situation or status.  Accordingly,  each purchaser of our common stock
or Series A Preferred  Stock  should  consult  his or her own tax  advisor  with
respect to the tax  consequences  to him or her,  including  those under  state,
local, foreign, and other tax laws.


                                       58





                                  LEGAL MATTERS


         The validity of our common stock and Series A Preferred  Stock  offered
hereby will be passed upon by Dechert, New York, New York.

                                     EXPERTS

         The consolidated  financial statements and schedules as of December 29,
2001 and December 30, 2000 and for the years ended  December 29, 2001,  December
30, 2000 and January 1, 2000 included in this prospectus and in the registration
statement of which this  prospectus  is a part have been so included in reliance
upon the report of KPMG LLP, independent accountants, appearing elsewhere herein
and upon the authority of said firm as experts in accounting  and auditing.  The
audit report covering the December 29, 2001  consolidated  financial  statements
contains an explanatory  paragraph that states there is substantial  doubt about
our  ability  to  continue  as  a  going  concern.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
that uncertainty.

                       WHERE YOU CAN FIND MORE INFORMATION

         We are  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended.  In accordance  with the Exchange Act, we file
periodic  reports,   proxy  statements  and  information  statements  and  other
information with the Securities and Exchange Commission.

         We have filed with the Securities and Exchange Commission,  Washington,
D.C.  20549, a registration  statement on Form S-1 under the Securities Act with
respect to our common stock and Series A Preferred  Stock offered  hereby.  This
prospectus does not contain all of the information set forth in the registration
statement  and the exhibits and  schedules to the  registration  statement.  For
further  information with respect to our company and our common stock and Series
A  Preferred  Stock  offered  hereby,  reference  is  made  to the  registration
statement  and the exhibits and  schedules  filed as a part of the  registration
statement.  Statements  contained in this prospectus  concerning the contents of
any contract or any other document are not  necessarily  complete;  reference is
made in each instance to the copy of such contract or any other  document  filed
as an exhibit to the registration statement. Each such statement is qualified in
all respects by such  reference to such  exhibit.  The  registration  statement,
including  exhibits and schedules thereto,  as well as all other reports,  proxy
statements,  information  statements  and  other  information  we file  with the
Securities  and  Exchange  Commission,  may be inspected  without  charge at the
Securities and Exchange Commission's  principal office in Washington,  D.C., and
copies of all or any part  thereof  may be  obtained  from the Public  Reference
Section of the  Securities  and Exchange  Commission,  450 Fifth  Street,  N.W.,
Washington,  D.C. 20549,  after payment of fees prescribed by the Securities and
Exchange Commission. The Securities and Exchange Commission also maintains a Web
site which provides online access to reports,  proxy and information  statements
and other information  regarding  registrants that file  electronically with the
Securities and Exchange Commission at the address http://www.sec.gov.

         We will  furnish  without  charge to each person to whom a copy of this
prospectus is delivered,  upon written or oral request, a copy of any and all of
these filings (except  exhibits,  unless they are  specifically  incorporated by
reference into this prospectus). Please direct any requests for copies to:

                           Darling International Inc.
                     251 O'Connor Ridge Boulevard, Suite 300
                                Irving, TX 75038
                        Attention: Joseph R. Weaver, Jr.
                             Telephone: 917.717.0300
                                Fax: 917.281.4475
                    E-mail: corporatesecretary@darlingii.com


                                       59






                                         INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                                                                      Pages
                                                                                                                      -----
                                                                                                                   

Consolidated Financial Statements as of March 30, 2002 and March 31, 2001 and
for the Three Months Ended March 30, 2002 and March 31, 2001 (Unaudited)

Consolidated Balance Sheets.............................................................................................F-2

Consolidated Statements of Operations...................................................................................F-3

Consolidated Statements of Cash Flows...................................................................................F-4

Notes to Consolidated Financial Statements..............................................................................F-5


Consolidated Financial Statements as of December 29, 2001 and December 30, 2000
and for the Three Years Ended December 29, 2001

Independent Auditors' Report...........................................................................................F-13

Consolidated Balance Sheets............................................................................................F-14

Consolidated Statements of Operations..................................................................................F-15

Consolidated Statements of Stockholders' Equity........................................................................F-16

Consolidated Statements of Cash Flows..................................................................................F-17

Notes to Consolidated Financial Statements.............................................................................F-18


Other Financial Information - Pro Forma Financial Information

Introduction to Unaudited Pro Forma Financial Statements...............................................................F-41

Unaudited Pro Forma Consolidated Balance Sheets - March 30, 2002 and December 31, 2001.................................F-42

Unaudited Pro Forma Consolidated Statements of Operations - Three Months Ended March 30, 2002 and
Year Ended December 31, 2001...........................................................................................F-44

Notes to Unaudited Pro Forma Consolidated Financial Statements.........................................................F-45




                                                             F-1








                                     DARLING INTERNATIONAL INC. AND SUBSIDIARIES


                                             CONSOLIDATED BALANCE SHEETS
                                        March 30, 2002 and December 29, 2001
                                  (in thousands, except shares and per share data)

                                                                                         March 30,     December 29,
                                                                                           2001            2001
                                                                                         ---------     ------------
                                                                                        (unaudited)
                                                                                                  

ASSETS
Current assets:
     Cash and cash equivalents                                                         $    2,999         $   3,668
     Accounts receivable                                                                   18,957            23,719
     Inventories                                                                            7,874             7,698
     Prepaid expenses                                                                       5,316             4,394
     Deferred income taxes                                                                  2,203             2,203
     Other                                                                                    184             3,668
                                                                                       ----------         ---------
         Total current assets                                                              37,533            41,891

Property, plant and equipment, less accumulated
   depreciation of $158,389 at March 30, 2002 and
   $155,555 at December 29, 2001                                                           75,064            74,744
Collection routes and contracts, less accumulated
   amortization of $21,587 at March 30, 2002 and
   $22,139 at December 29, 2001                                                            26,231            27,366
Goodwill, less accumulated amortization of $1,077
   at March 30, 2002 and December 29, 2001                                                  4,429             4,429
Assets held for sale                                                                        3,002             3,002
Other noncurrent assets                                                                     8,197             7,647
                                                                                       ----------         ---------

                                                                                       $  154,456         $ 159,079
                                                                                       ==========         =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
    Current portion of long-term debt                                                  $    5,120          $120,053
    Accounts payable, principally trade                                                     7,864            11,104
    Accrued expenses                                                                       22,310            24,069
    Accrued interest                                                                        5,525             3,383
                                                                                       ----------         ---------
         Total current liabilities                                                         40,819           158,609

Long-term debt, less current portion                                                      112,127                 -
Other non-current liabilities                                                               8,591             8,134
Deferred income taxes                                                                       1,990             1,990
                                                                                       ----------         ---------
         Total liabilities                                                                163,527           168,733
                                                                                       ----------         ---------

Stockholders' equity (deficit):
    Preferred stock, $0.01 par value; 1,000,000 shares
     authorized, none issued                                                                    -                 -
    Common stock, $0.01 par value; 25,000,000 shares authorized;
     15,589,362 shares issued and outstanding                                                 156               156
    Additional paid-in capital                                                             35,235            35,235
    Treasury stock, at cost;  21,000 shares at March 30, 2002 and
       December 29, 2001                                                                     (172)             (172)
    Accumulated comprehensive loss                                                           (533)             (533)
    Accumulated deficit                                                                   (43,757)          (44,340)
                                                                                       ----------         ----------
         Total stockholders' equity (deficit)                                              (9,071)           (9,654)
                                                                                       ----------         ----------
Contingencies (note 3)
                                                                                       $  154,456         $ 159,079
                                                                                       ===========        =========
 The accompanying notes are an integral part of these consolidated financial statements.




                                                         F-2





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      Three months ended March 30, 2002 and
                          March 31, 2001 (in thousands,
                             except per share data)
                                   (unaudited)


                                                          Three Months Ended
                                                          ------------------
                                                      March 30,        March 31,
                                                        2002             2002
                                                     ----------        ---------

Net sales                                            $  61,681         $ 63,634
Costs and expenses:
    Cost of sales and operating expenses                46,395           48,312
    Selling, general and administrative expenses         7,160            7,005
    Depreciation and amortization                        4,392            6,814
                                                     ----------        ---------

         Total costs and expenses                       57,947           62,131
                                                     ----------        ---------

         Operating income                                3,734            1,503
                                                     ----------        ---------

Other income (expense):
    Interest expense                                    (3,885)          (3,227)
    Other, net                                             734              575
                                                     ----------        ---------

         Total other income (expense)                   (3,151)
                                                     ----------

         Income (loss) before income taxes                 583           (1,149)

Income taxes                                                 -                 -
                                                     ----------        ---------

         Net income (loss)                           $     583         $ (1,149)
                                                     ==========        =========

Basic and diluted income (loss) per share            $    0.04         $  (0.07)
                                                     ==========        =========


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-3






                                    DARLING INTERNATIONAL INC. AND SUBSIDIARIES

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                Three Months ended March 30, 2002 and March 31, 2001
                                                   (in thousands)
                                                    (unaudited)

                                                                                        Three Months Ended
                                                                                     March 30,        March 31,
                                                                                       2002              2001
                                                                                    -----------       ---------
                                                                                                

Cash flows from operating activities:
    Net income (loss)                                                               $      583         $   (1,149)
    Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
        Depreciation and amortization                                                    4,392              6,814
        Gain on disposal of property, plant, equipment and other assets                   (901)               (74)
        Changes in operating assets and liabilities:
          Accounts receivable                                                            4,762               (469)
          Inventories and prepaid expenses                                              (1,098)              (605)
          Accounts payable and accrued expenses                                         (4,999)            (2,724)
          Accrued interest                                                               2,142               (357)
          Other                                                                             25                343
                                                                                    -----------        -----------

              Net cash provided by operating activities                                  4,906               1,779
                                                                                    -----------        -----------

Cash flows from investing activities:
    Capital expenditures                                                                (3,622)            (1,532)
    Proceeds from disposal of property, plant, equipment and other assets                  946                112
                                                                                    -----------        -----------

              Net cash used by investing activities                                     (2,676)            (1,420)
                                                                                    -----------        -----------

Cash flows from financing activities:
    Proceeds from long-term debt                                                        47,291             53,042
    Payments on long-term debt                                                         (50,097)           (53,552)
    Contract payments                                                                      (93)              (505)
                                                                                    -----------        -----------

              Net cash used by financing activities                                     (2,899)            (1,015)
                                                                                    -----------        -----------

Net decrease in cash and cash equivalents                                                 (669)              (656)
Cash and cash equivalents at beginning of period                                         3,668              3,509
                                                                                    -----------        -----------
Cash and cash equivalents at end of period                                          $    2,999         $    2,853
                                                                                    ===========        ===========

Supplemental disclosure of cash flow information: Cash paid during the period
    for:
       Interest                                                                     $    1,743         $    3,584
                                                                                    -----------        -----------
       Income taxes, net of refunds                                                 $        -         $        -
                                                                                    -----------        -----------


 The accompanying notes are an integral part of these consolidated financial statements.




                                                        F-4





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                 March 30, 2002
                                   (unaudited)


(1)    General

       The accompanying  consolidated  financial  statements for the three month
       periods  ended March 30,  2002 and March 31,  2001 have been  prepared by
       Darling International Inc. (Company) without audit, pursuant to the rules
       and  regulations  of the Securities and Exchange  Commission  (SEC).  The
       information furnished herein reflects all adjustments (consisting only of
       normal  recurring  accruals)  which are,  in the  opinion of  management,
       necessary  to present a fair  statement  of the  financial  position  and
       operating  results of the Company as of and for the  respective  periods.
       However,  these operating  results are not necessarily  indicative of the
       results expected for a full fiscal year. Certain information and footnote
       disclosures  normally included in annual financial statements prepared in
       accordance  with  generally  accepted  accounting  principles  have  been
       omitted  pursuant to such rules and regulations.  However,  management of
       the Company believes that the disclosures herein are adequate to make the
       information  presented  not  misleading.  The  accompanying  consolidated
       financial  statements  should  be read in  conjunction  with the  audited
       consolidated  financial statements contained in the Company's Form 10-K/A
       for the fiscal year ended December 29, 2001.

(2)    Summary of Significant Accounting Policies

       (a)    Basis of Presentation

              The consolidated  financial statements include the accounts of the
              Company  and  its  subsidiaries.   All  significant   intercompany
              balances and transactions have been eliminated in consolidation.

       (b)    Fiscal Periods

              The Company  has a 52/53 week  fiscal year ending on the  Saturday
              nearest December 31. Fiscal periods for the consolidated financial
              statements  included  herein are as of March 30, 2002, and include
              the 13 weeks  ended March 30,  2002,  and 13 weeks ended March 31,
              2001.

       (c)    Earnings (Loss) Per Share

              Basic and diluted  loss per common  share are computed by dividing
              net earnings (loss) by the weighted average number of common stock
              shares outstanding during the period.

              The weighted  average common shares used for basic earnings (loss)
              per common  share was  15,568,362  for both the three months ended
              March 30, 2002 and March 31,  2001.  The weighted  average  common
              shares  used for  diluted  earnings  (loss) per  common  share was
              15,830,189  and  15,568,362  for the three  months ended March 30,
              2002  and  March  31,  2001,  respectively.  Options  to  purchase
              2,343,938 and 2,334,380  shares were excluded from diluted earning
              (loss) per common  share for the three months ended March 30, 2002
              and March 31, 2001, as their effect was antidilutive.

       (d)    New Accounting Standards

              The Company adopted  Statement of Financial  Accounting  Standards
              No. 142,  Goodwill and Other Intangible  Assets  ("Statement 142")
              and Statement  144,  Accounting  for the Impairment or Disposal of
              Long-Lived  Assets,  on December 30, 2001 (the first day of Fiscal
              2002).


                                      F-5





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 30, 2002
                                   (unaudited)


              Statement 142 eliminates the  amortization  for goodwill and other
              intangible  assets with indefinite  lives.  Intangible assets with
              lives  restricted  by  contractual,  legal,  or other  means  will
              continue to be  amortized  over their useful  lives.  Goodwill and
              other intangible assets not subject to amortization are tested for
              impairment  annually  or more  frequently  if events or changes in
              circumstances indicate that the asset might be impaired. Statement
              142 requires a two-step process for testing impairment. First, the
              fair value of each  reporting  unit is  compared  to its  carrying
              value to determine whether an indication of impairment  exists. If
              impairment  is  indicated,  then the fair  value of the  reporting
              unit's  goodwill is determined by allocating the unit's fair value
              to  its  assets  and  liabilities   (including  any   unrecognized
              intangible assets) as if the reporting unit had been acquired in a
              business  combination.  The amount of  impairment  for goodwill is
              measured as the excess of its carrying  value over its fair value.
              The Company is evaluating  the impact of adopting  Statement  142,
              including whether any transitional goodwill impairment losses will
              be required to be recognized as the cumulative  effect of a change
              in accounting principle.

              Intangible  assets  subject to  amortization  under  Statement 142
              consist  of  collection   routes  and  contracts  and  non-compete
              agreements.   Amortization   expense  is   calculated   using  the
              straight-line  method over the estimated  useful life of the asset
              ranging from 3 to 15 years.

              The gross carrying  amount of collection  routes and contracts and
              non-compete   agreements  subject  to  amortization   include  (in
              thousands):



                                                                                 March 30,      December 29,
                                                                                  2002              2001
                                                                                ----------------------------
                                                                                           

                 Collection Routes and Contracts:
                    Routes                                                      $  42,307         $  42,307
                    Non-compete agreements                                          5,232             6,797
                    Royalty and consulting agreements                                 279               401
                                                                                ---------         ---------
                                                                                   47,818            49,505
                Accumulated Amortization:
                    Routes                                                        (18,341)          (17,498)
                    Non-compete agreements                                         (3,127)           (4,423)
                    Royalty and consulting agreements                                (119)             (218)
                                                                                ----------        ----------
                                                                                  (21,587)          (22,139)
                                                                                ----------        ----------
                Collection routes and contracts,
                   less accumulated amortization                                $  26,231         $  27,366
                                                                                ==========        ==========



              Amortization expense for the three months ended March 30, 2002 and
              March  31,  2001  was  approximately  $1,135,000  and  $1,386,000,
              respectively.  Amortization expense for the next five fiscal years
              is estimated to be $4,178,000,  $4,061,000, $3,937,000, $3,937,000
              and $3,937,000.

              The Company has  identified  its  reporting  units for purposes of
              assessing   goodwill   impairment  to  be  the  individual   plant
              locations.


                                      F-6





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 30, 2002
                                   (unaudited)


              The effect of the adoption of Statement  142 on net income  (loss)
              and earnings (loss) per share is as follows (in thousands,  except
              per share date):

                                                           Three Months Ended
                                                       -------------------------
                                                        March 30,     March 31,
                                                          2002          2001
                                                       -------------------------

                Reported net income (loss)               $  583       $(1,149)
                Add back:  goodwill amortization              -            90
                                                         ------       --------
                Adjusted net income (loss)               $  583       $(1,059)
                                                         ======       ========

                Basic earnings (loss) per share:
                Reported net income (loss)               $ 0.04       $ (0.07)
                Add back:  goodwill amortization              -             -
                                                         ------       --------
                Adjusted net income (loss)               $ 0.04       $ (0.07)
                                                         ======       ========

              Statement  144  supercedes   Statement  121,  Accounting  for  the
              Impairment  of Long Lived  Assets and for Long Lived  Assets to be
              Disposed  Of,  and the  accounting  and  reporting  provisions  of
              Accounting  Principles Board Opinion No. 30, Reporting the Results
              of Operations, Reporting the Effects of Disposal of a Segment of a
              Business,  and Extraordinary,  Unusual and Infrequently  Occurring
              Events and  Transactions.  Statement  144 retains the  fundamental
              provisions  of Statement 121 but  eliminates  the  requirement  to
              allocate   goodwill  to  long  lived   assets  to  be  tested  for
              impairment. Statement 144 also requires discontinued operations to
              be  carried  at the lower of cost or fair value less costs to sell
              and  broadens  the  presentation  of  discontinued  operations  to
              include a  component  of an  entity  rather  than a  segment  of a
              business.  The adoption of  Statement  144 did not have a material
              impact on the consolidated financial statements.

(3)    Contingencies

       LITIGATION

              Melvindale

              A  group  of  residents  living  near  the  Company's  Melvindale,
              Michigan plant has filed suit, purportedly on behalf of a class of
              persons  similarly  situated.  The  class has been  certified  for
              injunctive  relief  only.  The court  declined to certify a damage
              class  but has  permitted  approximately  300  people  to join the
              lawsuit  as  plaintiffs.  The suit is based on legal  theories  of
              trespass,  nuisance and negligence and/or gross negligence, and is
              pending in the United States District Court,  Eastern  District of
              Michigan.   Plaintiffs   allege   that   emissions   to  the  air,
              particularly  odor,  from the  plant  have  reduced  the value and
              enjoyment of Plaintiffs' property, and Plaintiffs seek unspecified
              compensatory  and  exemplary  damages  in an  amount  in excess of
              $25,000 per  Plaintiff  and  unspecified  injunctive  relief.  The
              Company is unable to estimate its  potential  liability  from this
              lawsuit.  In a lawsuit  with  similar  factual  allegations,  also
              pending in United  States  District  Court,  Eastern  District  of
              Michigan,  the City of  Melvindale  has  filed  suit  against  the
              Company based on legal theories of nuisance, trespass,  negligence
              and violation of Melvindale  nuisance  ordinances  seeking damages
              and declaratory and injunctive relief. The court has dismissed the
              trespass counts in both lawsuits,  and all of the damage claims in
              the suit filed by the City of Melvindale have been dismissed.  The
              City of Melvindale now seeks unspecified  injunctive  relief.  The
              Company or its predecessors have operated a rendering plant at the
              Melvindale  location since 1927 in a heavily  industrialized  area
              down river south of  Detroit.  The Company has taken and is taking
              all reasonable steps to minimize odor emissions from its recycling
              processes and is defending the lawsuit vigorously.


                                      F-7





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 30, 2002
                                   (unaudited)


              Long Island City, NY

              The  Company  is a party to a lawsuit  that  seeks to  require  an
              environmental  cleanup at a property in Long Island City, New York
              where the Company formerly operated a rendering plant (referred to
              as the "Site").  DMJ Associates  (DMJ),  which holds a mortgage on
              the Site, has filed suit against the Company, as a former owner of
              the Site,  as well as others  including  the  present  tenants and
              operators of the Site, the owner of an abandoned  hazardous  waste
              disposal site  adjoining the Site (the "Disposal  Facility"),  and
              companies  that  disposed of wastes at the Disposal  Facility (the
              "Generator  Defendants").  DMJ  argues  that,  inter  alia,  under
              federal  law  it is  entitled  to  relief  directed  to  have  the
              defendants  remediate the contamination.  DMJ seeks both equitable
              and  monetary  relief  from  all  defendants  for   investigation,
              abatement and  remediation  of the Site.  DMJ has not yet provided
              information  sufficient for the Company to ascertain the magnitude
              or amount of DMJ's total  claim nor the  Company's  alleged  share
              thereof.  As a result,  the  Company  is unable  to  estimate  its
              potential  liability from this lawsuit.  The Company does not have
              information  suggesting that it contributed in any material way to
              any  contamination  that may exist at the  Site.  The  Company  is
              actively defending the suit and is awaiting a decision on a motion
              on summary judgment regarding the standing of the plaintiff.

              Sauget, Illinois

              The  Company is a party to a lawsuit  that seeks to recover  costs
              related to an environmental  cleanup in or near Sauget,  Illinois.
              The United States had filed a complaint  against Monsanto Chemical
              Company, Solutia, Inc., Anheuser-Busch,  Inc., Union Electric, and
              14 other  defendants,  seeking to recover cleanup costs.  Monsanto
              (which merged with  Pharmacia and Upjohn,  Inc. in 2000 and is now
              known as Pharmacia  Corporation) and Solutia in turn filed a third
              party  complaint  seeking  contribution  from the  United  States,
              several federal agencies,  and six more companies,  in addition to
              the  Company.  As  potentially   responsible  parties  themselves,
              Pharmacia   and  Solutia   are  seeking  to  recover   unspecified
              proportionate  shares from each of the other parties,  in addition
              to the Company,  of an as yet  undetermined  total cleanup cost. A
              subsidiary  of the Company had  operated an  inorganic  fertilizer
              plant in Sauget,  Illinois  for a number of years prior to closing
              it in the 1960's.  The Company is defending this case  vigorously,
              and does not believe,  based upon currently available information,
              that the fertilizer  plant  contributed in any  significant way to
              the contamination that is leading to the environmental cleanup, or
              that  its  share,  if  any,  of the  cost of the  cleanup  will be
              material.  Accordingly,  the  Company  is unable to  estimate  its
              potential liability from this lawsuit.

              Other Litigation

              The Company is also a party to several other lawsuits,  claims and
              loss   contingencies   incidental  to  its   business,   including
              assertions  by  certain   regulatory   agencies  related  to  air,
              wastewater,   and  storm  water   discharges  from  the  Company's
              processing facilities.


                                      F-8





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 30, 2002
                                   (unaudited)


              Self Insured Risks

              The Company purchases its workers  compensation,  auto and general
              liability insurance on a retrospective  basis. The Company accrues
              its expected  ultimate  costs related to claims  occurring  during
              each fiscal year and carries this accrual as a reserve  until such
              claims are paid by the Company.

              The  Company  has   established   loss  reserves  for   insurance,
              environmental  and  litigation  matters as a result of the matters
              discussed  above.   Although  the  ultimate  liability  cannot  be
              determined with certainty, management of the Company believes that
              reserves for  contingencies  are reasonable  and sufficient  based
              upon present  governmental  regulations and information  currently
              available to management. The accrued expenses and other noncurrent
              liabilities  classifications in the Company's consolidated balance
              sheets   include   reserves  for  insurance,   environmental   and
              litigation  contingencies  of $10.6  million at March 30, 2002 and
              December 29, 2001. There can be no assurance,  however, that final
              costs related to these matters will not exceed current  estimates.
              The Company  believes that any  additional  liability  relative to
              such  lawsuits  and claims  which may not be covered by  insurance
              would not likely have a material  adverse  effect on the Company's
              financial position,  although it could potentially have a material
              impact on the results of operations in any one year.

(4)    Business Segments

              The  Company  operates on a worldwide  basis  within two  industry
              segments:  Rendering  and  Restaurant  Services.  The  measure  of
              segment profit (loss)  includes all revenues,  operating  expenses
              (excluding  certain  amortization  of  intangibles),  and selling,
              general and  administrative  expenses  incurred  at all  operating
              locations and excludes general corporate expenses.

              Included in corporate  activities are general  corporate  expenses
              and the  amortization  of  intangibles  related  to  "Fresh  Start
              Reporting."   Assets  of  corporate   activities   include   cash,
              unallocated  prepaid  expenses,   deferred  tax  assets,   prepaid
              pension, and miscellaneous other assets.

              Rendering

              Rendering  consists of the  collection  and  processing  of animal
              by-products  from butcher shops,  grocery  stores and  independent
              meat and poultry  processors,  converting  these  by-products into
              similar products such as useable oils and proteins utilized by the
              agricultural and oleochemical industries.

              Restaurant Services

              Restaurant  Services  consists of the  collection  of used cooking
              oils from  restaurants  and recycling  them into similar  products
              such as high-energy  animal feed  ingredients and industrial oils.
              Restaurant Services also provides grease trap servicing.


                                      F-9






                                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                            Notes to Consolidated Financial Statements (continued)
                                                March 30, 2002
                                                  (unaudited)


                                  Business Segment Net Sales (in thousands):

                                                                                    Three Months Ended
                                                                                -----------------------------
                                                                                 March 30,     March 31,
                                                                                   2002           2001
                                                                                -----------------------------
                                                                                            

                Rendering:
                   Trade                                                        $  45,595         $  49,762
                   Intersegment                                                     7,879             6,188
                                                                                ----------        ---------
                                                                                   53,474            55,950
                                                                                ----------        ---------
                Restaurant Services:
                   Trade                                                           16,086            13,872
                   Intersegment                                                     1,976             1,799
                                                                                ----------        ---------
                                                                                   18,062            15,671
                                                                                 ---------        ---------

                Eliminations                                                       (9,855)           (7,987)
                                                                                ----------        ----------
                Total                                                           $  61,681         $  63,634
                                                                                ==========        ==========
              Business Segment Profit (Loss) (in thousands):


                                                                                    Three Months Ended
                                                                                -----------------------------
                                                                                 March 30,     March 31,
                                                                                   2002           2001
                                                                                -----------------------------

                Rendering                                                       $   4,149         $   2,500
                Restaurant Services                                                 3,839               935
                Corporate activities                                               (3,520)           (1,357)
                Interest expense                                                   (3,885)           (3,227)
                                                                                ----------        ----------
                Net earnings (loss) before income taxes                         $     583         $  (1,149)
                                                                                ==========        ==========


              Certain assets are not attributable to a single operating  segment
              but instead relate to multiple operating segments operating out of
              individual  locations.  These  assets  are  utilized  by both  the
              Rendering  and  Restaurant  Services  business  segments  and  are
              identified in the category Combined Rendering/Restaurant Services.
              Depreciation of Combined  Rendering/Restaurant  Services assets is
              allocated   based  upon  an   estimate   of  the   percentage   of
              corresponding  activity attributed to each segment.  Additionally,
              although  intangible  assets are allocated to operating  segments,
              the   amortization   related  to  the  adoption  of  "Fresh  Start
              Reporting" is not  considered in the measure of operating  segment
              profit (loss) and is included in Corporate Activities.

              Business Segment Assets (in thousands):


                                                                                    Three Months Ended
                                                                                -----------------------------
                                                                                 March 30,         March 31,
                                                                                   2002           2001
                                                                                -----------------------------
             Rendering                                                          $  55,493         $  56,847
             Restaurant Services                                                   16,158            14,779
             Combined Rendering/Restaurant Services                                58,756            64,155
             Corporate Activities                                                  24,049            23,298
                                                                                ---------          --------
             Total                                                              $ 154,456         $ 159,079
                                                                                =========          ========



                                      F-10




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 30, 2002
                                   (unaudited)

(5)    Income Taxes

       The Company  assesses  the amount of  valuation  allowance  recorded as a
       reduction of deferred tax assets by considering  its ability to carryback
       net  operating  losses,   scheduled   reversals  of  future  taxable  and
       deductible temporary differences,  future taxable income and tax planning
       strategies.  Based on the Company's  assessment of these matters at March
       30, 2002 and March 31, 2001, the Company  recorded a valuation  allowance
       to reduce its net deferred tax assets to zero.

(6)    Recapitalization

       On May 13, 2002, the Company consummated a recapitalization  and executed
       a new amended and restated Credit  Agreement with its lenders whereby the
       Company  exchanged  borrowings  outstanding  under  its  previous  Credit
       Agreement,  a portion of the accrued  interest and  commitment  fees, and
       forbearance  fees payable for newly  issued  common stock equal to 75% of
       the  Company's  total  outstanding  common stock on a fully diluted basis
       (exclusive of stock options  issued and  outstanding),  and 6% cumulative
       redeemable  preferred  stock  with a face  value  of $10.0  million.  The
       Company's  new Credit  Agreement  includes  a term loan in the  principal
       amount of $61.0 million and also provides for a revolving credit facility
       which will enable the Company to borrow or issue  letters of credit of up
       to $17.3 million.

       Substantially  all assets of the Company are either  pledged or mortgaged
       as collateral  for  borrowings  under the new Credit  Agreement.  The new
       Credit Agreement contains certain terms and covenants, which, among other
       matters, restrict the incurrence of additional indebtedness,  the payment
       of cash  dividends,  the  retention  of  certain  proceeds  from sales of
       assets, and the annual amount of capital  expenditures,  and requires the
       maintenance of certain minimum financial ratios.

       The  classification of long-term debt in the accompanying  March 30, 2002
       consolidated  balance sheet is based on the  repayment  terms of the debt
       issued under the new Credit  Agreement  pursuant to the  recapitalization
       and also reflects an estimate of the effect of applying the provisions of
       Statement  15,  Accounting  by Debtors and  Creditors  for Troubled  Debt
       Restructurings.  Statement 15 requires  that the existing  amount of debt
       owed by the  Company  to the  lenders be reduced by the fair value of the
       equity interest granted and that no gain from restructuring the Company's
       debt be recognized.  Interest expense on the remaining carrying amount of
       debt  reported  in  our  financial  statements  will  be  based  on a new
       effective interest rate that equates the present value of the future cash
       payment  specified  by the new terms of the term  loan with the  carrying
       amount of the debt.

       Management  believes the cash flow from operating  activities at the same
       level as Fiscal 2001 and funds available  under the new Credit  Agreement
       will be sufficient to meet working capital and capital  expenditure needs
       for at least the next 12 months.

(7)    Derivative Instruments

       The Company makes limited use of  derivative  instruments  to manage cash
       flow risks related to interest and natural gas expense.  The Company does
       not use derivative instruments for trading purposes.

       At March 30, 2002 and  December  29,  2001,  the Company was party to two
       interest  rate swap  agreements  whereby the interest  obligation  on $45
       million of floating-rate debt has been exchanged for fixed rate contracts
       which  bear  interest,  payable  quarterly.  One swap  agreement  for $25
       million  matures  June  27,  2002,  bears  interest  at  6.5925%  and the
       Company's  receive rate is based on the three-month  LIBOR. A second swap
       agreement for $20 million matures June 27, 2002,  bears interest at 9.17%
       and the  Company's  receive  rate is based on the Base Rate.  The Company
       recorded $0.5 million of additional  interest expense in the three months
       ended  March  31,  2001  related  to the  change  in fair  value of these
       agreements.  The portion of the interest rate swap  agreements  extending
       beyond  June  30,  2001,  the  expiration  date  of the  previous  Credit
       Agreement,  is not considered a hedge. Changes in the fair value of these
       agreements  subsequent  to June 30,  2001,  have been  included  in other
       income  (expense).  The Company  recorded a liability of $0.5 million and
       $1.0 million at March 30, 2002 and December 29, 2001, respectively,  (the
       fair value of the interest rate swap agreements at such dates),  which is
       included in accrued expenses.


                                      F-11




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 30, 2002
                                   (unaudited)

       Through March 2001, the Company was party to natural gas swap  agreements
       representing  approximately  300,000 mmbtu's of natural gas per month for
       January,  February  and  March,  2001,  with a NYMEX  purchase  price  of
       approximately $4.682/mmbtu.  All of the Company's positions in these swap
       agreements were settled during the three months ended March 31, 2001, and
       the Company  recorded  gains of $2.6  million as a reduction of operating
       expenses  and  $0.5  million  as  other  income  for  the  effective  and
       ineffective  portions of these hedge transactions during this period. The
       Company no longer  uses  natural gas swap  agreements  to manage its cash
       flow risk arising from the purchase of natural gas used in its plants.

       As of March 30,  2002,  the Company had forward  purchase  agreements  in
       place for purchases of  approximately  624,000 mmbtu's of natural gas for
       the period April through  December,  2002,  based on an average  purchase
       price of $2.78/mmbtu.  These agreements have no net settlement provisions
       and the  Company  intends to take  physical  delivery,  which it has done
       under similar forward  purchase  agreements from March through  December,
       2001. Accordingly,  the agreements are not subject to the requirements of
       Statement 133 because they qualify as normal  purchases as defined in the
       standard.

(8)    Comprehensive Income

       The Company  follows the provisions of Statement of Financial  Accounting
       Standards  No.  130,  Reporting  Comprehensive  Income  (Statement  130).
       Statement 130  establishes  standards for reporting and  presentation  of
       comprehensive  income and its  components.  In accordance  with Statement
       130, the Company has presented the components of comprehensive  income in
       its consolidated statement of stockholders' equity.

(9)    Revenue Recognition

       The Company recognizes revenue on sales when products are shipped and the
       customer takes  ownership and assumes risk of loss.  Collection  fees are
       recognized in the month the service is provided.


                                      F-12





                          INDEPENDENT AUDITORS' REPORT





The Board of Directors and Shareholders
Darling International Inc.:


We have audited the consolidated  financial statements of Darling  International
Inc. and subsidiaries as listed in the accompanying  index.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the  financial   position  of  Darling
International  Inc.  and  subsidiaries  as of December 29, 2001 and December 30,
2000,  and the results of their  operations and their cash flows for each of the
years in the  three-year  period ended  December 29, 2001,  in  conformity  with
accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the  consolidated  financial  statements,  the Company
changed  its  method  of  accounting  for  derivative  instruments  and  hedging
activities in 2001.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,   the  Company  has  debt  of  $120,027,000
classified  as a current  liability  at December  29, 2001 because it matured in
June 2001 and is now subject to a  recapitalization  agreement pursuant to which
the lenders have agreed to a forbearance  period expiring April 30, 2002, during
which time the Company will endeavor to consummate a new credit agreement. These
circumstances raise substantial doubt about the Company's ability to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
discussed in Note 2. The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.



                                                    KPMG LLP



Dallas, Texas
February 28, 2002


                                      F-13





                               DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                                       Consolidated Balance Sheets
                                 December 29, 2001 and December 30, 2000
                             (in thousands, except share and per share data)





                                                                         December 29,     December 30,
ASSETS (Notes 2 and 9)                                                       2001            2000
----------------------                                                   -------------    -------------
                                                                                    

Current assets:
     Cash and cash equivalents                                             $  3,668         $  3,509
     Accounts receivable, less allowance for bad debts of $467
        at December 29, 2001 and $680 at December 30, 2000                   23,719           21,837
     Inventories (Note 3)                                                     7,698            8,300
     Prepaid expenses                                                         4,394            3,046
     Deferred income taxes (Note 11)                                          2,203            3,081
     Assets held for sale (Note 5)                                                -            3,161
     Other (Note 1)                                                             209            2,923
                                                                           ---------        ---------
              Total current assets                                           41,891           45,857

Property, plant and equipment, net (Note 4)                                  74,744           88,242
Collection routes and contracts, less accumulated amortization of
     $22,139 at Dec. 29, 2001 and $18,828 at Dec. 30, 2000                   27,366           32,140
Goodwill, less accumulated amortization of $1,077 at
     December 29, 2001 and $883 at December 30, 2000                          4,429            4,632
Deferred loan costs                                                               -              629
Assets held for sale (Note 5)                                                 3,002                -
Other assets (Note 6)                                                         7,647            3,005
                                                                           ---------        ---------
                                                                           $159,079         $174,505
                                                                           =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
     Current portion of long-term debt (Note 9)                            $120,053         $109,528
     Accounts payable, principally trade                                     11,104           14,341
     Accrued expenses (Note 7)                                               24,069           23,160
     Accrued interest                                                         3,383            3,038
     Deferred income (Note 1)                                                       -          2,599
                                                                           ---------        ---------
              Total current liabilities                                     158,609          152,666

Other noncurrent liabilities (Note 10)                                        8,134           16,247
Deferred income taxes (Note 11)                                               1,990            2,868
                                                                           ---------        ---------
              Total liabilities                                             168,733          171,781
                                                                           ---------        ---------

Stockholders' equity (deficit) (Note 12):
     Preferred stock, $0.01 par value; 1,000,000 shares
         authorized,  none issued                                                 -                -
     Common stock, $.01 par value; 25,000,000 shares authorized,
         15,589,362 shares issued and outstanding
         at December 29, 2001 and December 30, 2000                             156              156
     Additional paid-in capital                                              35,235           35,235
     Treasury stock, at cost; 21,000 shares at December 29, 2001
         and December 30, 2000                                                 (172)            (172)
     Accumulated comprehensive loss                                            (533)               -
     Accumulated deficit                                                    (44,340)         (32,495)
                                                                           ---------        ---------
         Total stockholders' equity (deficit)                                (9,654)           2,724
                                                                           ---------        ---------
Commitments and contingencies (Notes 8 and 16)
                                                                           $159,079         $174,505
                                                                           =========        =========

 The accompanying notes are an integral part of these consolidated financial statements.




                                      F-14





                                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES


                                      Consolidated Statements of Operations
                                       Three years ended December 29, 2001
                                      (in thousands, except per share data)





                                                        December 29,
                                                            2001            December 30,          January 1,
                                                                                2000                 2000
                                                       ----------------    ----------------     ---------------
                                                                                       

Net sales                                                 $255,974            $242,795             $258,570
                                                          --------            --------             ---------
Costs and expenses:
    Cost of sales and operating expenses                   196,778             190,283              210,879
    Selling, general and administrative expenses            28,594              26,736               26,773
    Depreciation and amortization                           26,634              31,181               32,912
                                                          ---------           ----------           ----------
          Total costs and expenses                         252,006             248,200              270,564
                                                          ---------           ----------           ----------
          Operating income/(loss)                            3,968              (5,405)             (11,994)
                                                          ---------           ----------           ----------
Other income/(expense):
    Interest expense                                       (14,162)            (13,971)             (15,533)
    Other, net                                              (1,651)               (184)               1,812
                                                          ---------           ----------           ----------
          Total other income/(expense)                     (15,813)            (14,155)             (13,721)
                                                          ---------           ----------           ----------

Loss from continuing operations
    before income taxes                                    (11,845)            (19,560)             (25,715)
Income tax benefit (Note 11)                                      -                  -              (10,015)
                                                          ---------           ----------           ----------
    Loss from continuing operations                        (11,845)            (19,560)             (15,700)
    Gain/(loss) on disposal of discontinued
          operations, net of tax (Note 15)                        -                371                 (333)
                                                          ---------           ----------           ----------
Net loss                                                  $(11,845)           $(19,189)           $ (16,033)
                                                          =========           ==========           ==========

Basic and diluted earnings (loss) per share:
    Continuing operations                                 $  (0.76)           $  (1.25)            $  (1.01)
    Gain/(loss) on disposal of discontinued
          operations                                             -                0.02                (0.02)
                                                          ---------           ----------           ----------
                  Total                                   $  (0.76)           $  (1.23)            $  (1.03)
                                                          =========           ==========           ==========

 The accompanying notes are an integral part of these consolidated financial statements.




                                      F-15







                                             DARLING INTERNATIONAL INC. AND SUBSIDIARIES


                                           Consolidated Statements of Stockholders' Equity
                                                 Three years ended December 29, 2001
                                                  (In thousands, except share data)

                                                             Common stock
                                                       -----------------------


                                                                                                       Retained          Total
                                                             Additional                 Accumulated     earnings/    stockholders'
                                         Number    $.01 par    Paid-in     Treasury    comprehensive   (accumulated      equity
                                       of shares     value     capital       stock          loss         deficit)       (deficit)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                

Balances at January 2, 1999            15,568,362   $  156     $  35,235    $ (172)    $       -      $   (2,727)       $ 37,946

Net loss                                        -        -             -         -             -         (16,033)        (16,033)
                                       ----------   ------     ---------    -------    ----------     -----------       ---------

Balances at January 1, 2000            15,568,362      156        35,235      (172)            -         (13,306)         21,913

Net loss                                        -        -             -         -             -         (19,189)        (19,189)
                                       ----------   ------     ---------    ------     ----------     -----------       ---------

Balances at December 30, 2000          15,568,362   $  156     $  35,235      (172)            -      $  (32,495)       $  2,724

Net loss                                        -        -             -         -             -         (11,845)        (11,845)

Minimum pension liability                       -        -             -         -          (533)              -            (533)

Derivative transition
adjustment (Note 1)                            -         -             -         -         2,220               -           2,220

Net change arising from current period
hedging transactions (Note 1)                  -         -             -         -           376               -             376

Reclassifications into earnings (Note 1)       -         -             -         -        (2,596)              -          (2,596)
                                                                                                                        ---------

Total comprehensive loss                                                                                                 (12,378)
                                       ----------   ------     ---------    -------    ----------     -----------       ---------

Balances at December 29, 2001          15,568,362   $  156     $  35,235    $ (172)    $    (533)      $ (44,340)       $ (9,654)
                                       ==========   ======     =========    =======    ==========      ==========       =========

The accompanying notes are an integral part of these consolidated financial statements.




                                                               F-16






                                         DARLING INTERNATIONAL INC. AND SUBSIDIARIES


                                            Consolidated Statements of Cash Flows
                                             Three years ended December 29, 2001
                                                        (in thousands)

                                                                   December 29,         December 30,          January 1,
                                                                       2001                 2000                 2000
                                                                  ----------------     ----------------     ----------------
                                                                                                   

Cash flows from operating activities:
   Loss from continuing operations                                   $ (11,845)           $ (19,560)           $ (15,700)
   Adjustments to reconcile loss from continuing operations to
      net cash provided by continuing operating activities:
        Depreciation and amortization                                   26,634               31,181               32,912
        Deferred income tax benefit                                          -                    -               (9,911)
        Loss/(gain) on sale of assets                                      (80)                 144               (2,060)
        Changes in operating assets and liabilities:
               Accounts receivable                                      (1,882)              (4,850)                (372)
               Inventories and prepaid expenses                           (746)               2,246                2,092
               Accounts payable and accrued expenses                    (4,898)               3,070               (4,328)
               Accrued interest                                            345                2,928                 (546)
               Other                                                    (1,916)               1,084               (1,403)
                                                                     ----------           ----------           ----------
   Net cash provided by continuing operating activities                  5,612               16,243                  684
   Net cash provided by discontinued operations                              -                    -                  119
                                                                     ----------           ----------           ----------
        Net cash provided by operating activities                        5,612               16,243                  803
                                                                     ----------           ----------           ----------
Cash flows from investing activities:
   Recurring capital expenditures                                       (9,142)              (7,684)              (9,851)
   Gross proceeds from sale of property, plant and equipment,
      assets held for disposition and other assets                         145                4,412               32,150
   Payments related to routes and other intangibles                       (279)                (636)                (152)
   Net cash used in discontinued operations                                  -                    -                 (330)
                                                                     ----------           ----------           ----------
      Net cash provided by/(used in) investing activities               (9,276)              (3,908)              21,817
                                                                     ----------           ----------           ----------

Cash flows from financing activities:
   Proceeds from long-term debt                                        208,387              171,351              179,927
   Payments on long-term debt                                         (197,862)            (179,842)            (210,237)
   Contract payments                                                    (3,368)              (2,163)              (2,377)
   Deferred recapitalization costs                                      (3,334)                   -                    -
   Deferred loan costs                                                       -                    -                 (300)
   Net cash used in discontinued operations                                  -                    -                 (150)
                                                                     ----------           ----------           ----------
      Net cash provided by/(used in) financing activities                3,823              (10,654)             (33,137)
                                                                     ----------           ----------           ----------

Net change in cash and cash equivalents
   from discontinued operations                                              -                    -                   28
                                                                     ----------           ----------           ----------
Net increase/(decrease) in cash and cash equivalents                       159                1,681              (10,489)

Cash and  cash equivalents at beginning of year                          3,509                1,828               12,317
                                                                     ----------           ----------           ----------
Cash and cash equivalents at end of year                             $   3,668            $   3,509            $   1,828
                                                                     ==========           ==========           ==========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
      Interest                                                       $  13,817            $   9,161            $  14,550
                                                                     ----------           ----------           ----------
      Income taxes, net of refunds                                   $    (141)           $  (1,777)           $    (625)
                                                                     ----------           ----------           ----------

The accompanying notes are an integral part of these consolidated financial statements.



                                                             F-17





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


(1)      GENERAL

         (a)      NATURE OF OPERATIONS

                  Darling  International  Inc. (the  "Company") is a recycler of
                  food processing by-products in the United States,  operating a
                  fleet  of   vehicles,   through   which  it  collects   animal
                  by-products  and used  restaurant  cooking  oil  from  butcher
                  shops, grocery stores, independent meat and poultry processors
                  and  restaurants   nationwide.   The  Company   processes  raw
                  materials  through  facilities  located  throughout the United
                  States into finished products,  such as tallow,  meat and bone
                  meal,  and  yellow  grease.  The  Company  sells its  finished
                  products  domestically  and  internationally  to  producers of
                  soap,  cosmetics,  rubber, pet food and livestock feed for use
                  as ingredients in such products.

                  On October 22,  1993,  the Company  entered  into a settlement
                  agreement  approved by the U.S. District Court providing for a
                  restructure of the Company's debt and equity and resolution of
                  a class action  lawsuit (the  "Settlement").  The terms of the
                  settlement were tantamount to a prepackaged bankruptcy despite
                  the  settlement   not  occurring   under  Chapter  11  of  the
                  Bankruptcy  Code.  On December 29, 1993,  the  Settlement  was
                  consummated  and became  binding on all original note holders.
                  The Company has  accounted  for the  Settlement  using  "Fresh
                  Start  Reporting" as of January 1, 1994,  in  accordance  with
                  Statement of Position 90-7,  "Financial  Reporting by Entities
                  in  Reorganization  Under the United States  Bankruptcy  Code"
                  issued  by  the  American   Institute   of  Certified   Public
                  Accountants.  Using a valuation of the Company performed by an
                  independent  appraiser,   the  Company  determined  the  total
                  reorganization  value of all its  assets  to be  approximately
                  $236,294,000   as  of  January  1,  1994  and  the   Company's
                  accumulated deficit was eliminated as of January 1, 1994.

         (b)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  (1)      Basis of Presentation

                           The  consolidated  financial  statements  include the
                           accounts  of the Company  and its  subsidiaries.  All
                           significant  intercompany  balances and  transactions
                           have been eliminated in  consolidation.  As disclosed
                           in Note 15, the  operations of IPC, as defined below,
                           are classified as discontinued operations.

                  (2)      Fiscal Year

                           The  Company  has a 52/53 week  fiscal year ending on
                           the Saturday  nearest  December 31.  Fiscal years for
                           the consolidated financial statements included herein
                           are for the 52 weeks ended  December 29, 2001, the 52
                           weeks ended December 30, 2000, and the 52 weeks ended
                           January 1, 2000.

                  (3)      Inventories

                           Inventories  are  stated  at the  lower  of  cost  or
                           market.   Cost  is  determined  using  the  first-in,
                           first-out (FIFO) method.

                  (4)      Property, Plant and Equipment

                           Property,  plant and  equipment are recorded at cost.
                           Depreciation is computed by the straight-line  method
                           over  the  estimated  useful  lives  of  assets:   1)
                           Buildings  and  improvements,  24  to  30  years;  2)
                           Machinery  and  equipment,  3  to  8  years;  and  3)
                           Vehicles, 4 to 6 years.

                           Maintenance  and  repairs  are  charged to expense as
                           incurred  and  expenditures  for major  renewals  and
                           improvements are capitalized.


                                      F-18



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

                  (5)      Collection Routes and Contracts

                           Collection  routes  consist of groups of suppliers of
                           raw materials in similar  geographic areas from which
                           the Company derives collection fees, and a dependable
                           source of raw materials for processing  into finished
                           products. Restrictive covenants represent non-compete
                           agreements with former  competitors  whose businesses
                           were  acquired.   Amortization  is  computed  by  the
                           straight-line  method over the following periods:  1)
                           Collection  routes, 8 to 15 years; and 2) Restrictive
                           covenants, 3 to 10 years.

                  (6)      Goodwill

                           Goodwill,  which  represents  the excess of  purchase
                           price  over fair  value of net  assets  acquired,  is
                           amortized on a straight-line  basis over the expected
                           periods  to be  benefited,  not  exceeding  30 years.
                           Annually,  the Company assesses the recoverability of
                           this  intangible  asset by  determining  whether  the
                           amortization   of  the  goodwill   balance  over  its
                           remaining life can be recovered through  undiscounted
                           future   operating   cash   flows  of  the   acquired
                           operation. The amount of goodwill impairment, if any,
                           is  measured  based on  projected  discounted  future
                           operating cash flows using a discount rate reflecting
                           the Company's  average cost of funds.  The assessment
                           of the recoverability of goodwill will be impacted if
                           estimated   future   operating  cash  flows  are  not
                           achieved.

                  (7)      Environmental Expenditures

                           Environmental  expenditures  incurred  to mitigate or
                           prevent  environmental  contamination that has yet to
                           occur  and that  otherwise  may  result  from  future
                           operations are capitalized.  Expenditures that relate
                           to an existing  condition  caused by past  operations
                           and  that do not  contribute  to  current  or  future
                           revenues are expensed or charged against  established
                           environmental reserves. Reserves are established when
                           environmental     assessments     and/or     clean-up
                           requirements   are   probable   and  the   costs  are
                           reasonably estimable.

                  (8)      Income Taxes

                           The Company accounts for income taxes using the asset
                           and liability  method.  Under the asset and liability
                           method,  deferred  tax  assets  and  liabilities  are
                           recognized   for   the   future   tax    consequences
                           attributable  to  differences  between the  financial
                           statement  carrying  amounts of  existing  assets and
                           liabilities and their respective tax bases.  Deferred
                           tax assets and liabilities are measured using enacted
                           tax rates  expected to apply to taxable income in the
                           years  in  which  those  temporary   differences  are
                           expected to be  recovered  or settled.  The effect on
                           deferred  tax assets and  liabilities  of a change in
                           tax rates is  recognized in income in the period that
                           includes the enactment date.

                  (9)      Earnings Per Common Share

                           Basic  earnings  per  common  share are  computed  by
                           dividing net  earnings  attributable  to  outstanding
                           common stock by the weighted average number of common
                           shares  outstanding during the year. Diluted earnings
                           per  common   share  are  computed  by  dividing  net
                           earnings  attributable to outstanding common stock by
                           the  weighted   average   number  of  common   shares
                           outstanding  during the year  increased  by  dilutive
                           common equivalent  shares (stock options)  determined
                           using the treasury stock method, based on the average
                           market  price  exceeding  the  exercise  price of the
                           stock options.

                           The  weighted  average  common  shares used for basic
                           earnings per common share was 15,568,362,  15,568,362
                           and 15,568,362 for 2001, 2000 and 1999, respectively.
                           The  numbers  of  shares  for 2000 and 1999 have been
                           reduced  for  21,000  treasury  shares  from  numbers
                           previously reported,  which did not effect previously
                           reported earnings per share.

                                      F-19


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

                           For 2001, 2000 and 1999 the effect of all outstanding
                           stock options was excluded from diluted  earnings per
                           common share because the effect was anti-dilutive.

                  (10)     Stock Option Plans

                           The  Company  accounts  for its stock  option plan in
                           accordance   with  the   provisions   of   Accounting
                           Principles  Board ("APB") Opinion No. 25,  Accounting
                           for  Stock   Issued   to   Employees,   and   related
                           interpretations.  As such,  compensation  expense  is
                           recorded  on the  date of grant  only if the  current
                           market  price of the  underlying  stock  exceeds  the
                           exercise  price.  Statement of  Financial  Accounting
                           Standards   ("SFAS")   No.   123,    Accounting   for
                           Stock-Based   Compensation,   permits   entities   to
                           recognize as expense over the vesting period the fair
                           value of all stock-based awards on the date of grant.
                           Alternatively,   SFAS  No.  123  allows  entities  to
                           continue to apply the  provisions  of APB Opinion No.
                           25 and  provide  pro forma net  income  and pro forma
                           earnings per share  disclosures  for  employee  stock
                           option grants made in 1995 and future years as if the
                           fair-value-based  method  defined in SFAS No. 123 had
                           been applied.  The Company has elected to continue to
                           apply  the  provisions  of  APB  Opinion  No.  25 and
                           provide the pro forma  disclosure  provisions of SFAS
                           No. 123.

                  (11)     Statements of Cash Flows

                           The Company  considers all  short-term  highly liquid
                           instruments,  with  an  original  maturity  of  three
                           months or less, to be cash equivalents.

                  (12)     Use of Estimates

                           The   preparation  of  the   consolidated   financial
                           statements in conformity with  accounting  principles
                           generally  accepted  in the United  States of America
                           requires management to make estimates and assumptions
                           that  affect  the  reported  amounts  of  assets  and
                           liabilities  and disclosure of contingent  assets and
                           liabilities at the date of the consolidated financial
                           statements  and the reported  amounts of revenues and
                           expenses during the reporting period.  Actual results
                           could differ from those estimates.

                  (13)     Impairment of Long-Lived Assets and Long-Lived Assets
                           To Be Disposed Of

                           The Company  applies the  provisions of SFAS No. 121,
                           "Accounting  for the Impairment of Long-Lived  Assets
                           and for  Long-Lived  Assets to Be Disposed  Of." This
                           Statement requires that long-lived assets and certain
                           identifiable  intangibles  be reviewed for impairment
                           whenever events or changes in circumstances  indicate
                           that  the  carrying  amount  of an  asset  may not be
                           recoverable.  Recoverability of assets to be held and
                           used is  measured  by a  comparison  of the  carrying
                           amount of an asset to future net cash flows  expected
                           to be  generated  by the  asset.  If such  assets are
                           considered  to  be  impaired,  the  impairment  to be
                           recognized  is  measured  by the  amount by which the
                           carrying  amount of the assets  exceed the fair value
                           of the assets.  Assets to be disposed of are reported
                           at the lower of the  carrying  amount  or fair  value
                           less costs to sell.

                           In Fiscal  2001,  Fiscal 2000,  and Fiscal 1999,  the
                           Company  recorded  impairment  charges  of  $840,000,
                           $4,016,000, and $1,387,000,  respectively,  to reduce
                           the value of goodwill and certain land, buildings and
                           equipment to  estimated  fair value.  The  impairment
                           charges are included in depreciation and amortization
                           expense in the accompanying  Fiscal 2001, Fiscal 2000
                           and   Fiscal   1999   Consolidated    Statements   of
                           Operations.

                           The  Fiscal  2001   impairment   charge  of  $840,000
                           pertains  solely to assets held for sale (see Note 5)
                           in the  Company's  rendering  business  segment.  The
                           impairment  charges  were  necessary  to  reduce  the
                           carrying  value  of  these  assets  to   management's
                           estimate of

                                      F-20



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

                           their  net  realizable  value  in  light  of  current
                           economic conditions.  Estimated net realizable values
                           were  based on  information  from  business  and real
                           estate  brokers,   comparable  sales,   property  tax
                           valuations  and  internal  discussions  with  Company
                           employees  working in the  geographic  areas who were
                           familiar with the specific  assets.  A summary of the
                           impairment charge follows (in thousands):


                                     Land                               $106
                                     Leaseholds and buildings            134
                                     Equipment and furniture             600
                                                                        ----

                                              Total impairment          $840
                                                                        ====

                           The  Fiscal  2000  impairment  charge  of  $4,016,000
                           consists  of  (1)  $2,138,000  related  to  rendering
                           business segment operating  assets,  (2) $162,000 and
                           $375,000  related  to  restaurant  services  business
                           segment    equipment    and    allocable    goodwill,
                           respectively,  and (3)  $1,341,000  related to assets
                           held for  sale in the  Company's  rendering  business
                           segment.  The  impairment  charges  of the  assets in
                           operation  were made to reduce the carrying  value to
                           estimated fair value based on the  discounted  future
                           cash flows of the assets.  The impairment  charges of
                           the assets held for sale were necessary to reduce the
                           carrying  value  of  these  assets  to   management's
                           estimate  of  their  net  realizable  value  based on
                           information  from a business broker. A summary of the
                           impairment charge follows (in thousands):



                                                                            Restaurant
                                                         Rendering           Services              Total
                                                         ---------          ----------             -----
                                                                                        

                           Leaseholds
                           and buildings                 $    642             $     -            $    642
                           Equipment
                           and furniture                    2,837                 162               2,999
                           Goodwill                             -                 375                 375
                                                         --------             -------            --------
                                Total impairment         $  3,479             $   537            $  4,016
                                                         ========             =======            ========


                           The  Fiscal  1999  impairment  charge  of  $1,387,000
                           pertains  solely  to  assets  held  for  sale  in the
                           Company's rendering business segment.  The impairment
                           charges were  necessary to reduce the carrying  value
                           of these assets to management's estimate of their net
                           realizable  value.  Estimated net  realizable  values
                           were based on an offer from a  prospective  buyer and
                           information  from real estate  brokers.  A summary of
                           the impairment charge follows (in thousands):

                                     Leaseholds and buildings           $1,139
                                     Equipment                             248
                                                                        ------

                                              Total impairment          $1,387
                                                                        ======

                  (14)     Financial Instruments

                           The  carrying  amount  of cash and cash  equivalents,
                           accounts  receivable,  accounts  payable  and accrued
                           expenses  approximates  fair  value  due to the short
                           maturity of these instruments.

                                      F-21


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

                   The carrying amount for the Company's outstanding  borrowings
                   under the Credit Agreement and Term Loan described in Note 9,
                   approximates  the fair  value  due to the  floating  interest
                   rates on the borrowings.

                   The fair values of the  interest  rate swap  agreements  were
                   liabilities  of $1,020,000 and $874,400 at December 29, 2001,
                   and December 30, 2000,  respectively.  Current market pricing
                   models were used to estimate fair value of interest rate swap
                   agreements. See Note 9.

                   (15) Derivative Instruments

                        The Company makes limited use of derivative  instruments
                        to manage  cash  flow  risks  related  to  interest  and
                        natural  gas  expense.  Interest  rate swaps are entered
                        into  with the  intent  of  managing  overall  borrowing
                        costs.  The Company does not use derivative  instruments
                        for trading purposes.

                        Effective  December  31,  2000 (the  first day of Fiscal
                        2001),  the Company  adopted the provisions of Statement
                        of Financial  Accounting  Standards No. 133,  Accounting
                        for  Derivative   Instruments  and  Hedging   Activities
                        (Statement 133). Statement 133, as amended, standardizes
                        the accounting for  derivatives  instruments,  including
                        certain   derivative   instruments   embedded  in  other
                        contracts. Under the standard,  entities are required to
                        report all  derivative  instruments  in the statement of
                        financial  position at fair value.  The  accounting  for
                        changes in the fair value  (i.e.,  gains or losses) of a
                        derivative  instrument  depends  on  whether it has been
                        designated   and   qualifies   as  part  of  a   hedging
                        relationship  and,  if so, on the reason for holding the
                        instrument.  If certain conditions are met, entities may
                        elect to designate a derivative instrument as a hedge of
                        exposures  to  changes in fair  value,  cash  flows,  or
                        foreign currencies. The Company held no fair value hedge
                        or foreign  currency  hedge  derivative  instruments  at
                        December 30, 2000 or December  29,  2001.  If the hedged
                        exposure is a cash flow exposure,  the effective portion
                        of the  gain  or loss on the  derivative  instrument  is
                        reported initially as a component of other comprehensive
                        income   (outside  of  earnings)  and  is   subsequently
                        reclassified   into   earnings   when   the   forecasted
                        transaction affects earnings.  Any amounts excluded from
                        the  assessment  of hedge  effectiveness  as well as the
                        ineffective  portion of the gain or loss are reported in
                        earnings  immediately.  If the derivative  instrument is
                        not  designated  as  a  hedge,   the  gain  or  loss  is
                        recognized  in  earnings  in the period of change.  Upon
                        adoption,  the  provisions  of  Statement  133  must  be
                        applied prospectively.

                        Upon adoption of Statement 133 on December 31, 2000, the
                        Company was party to interest rate and natural gas swaps
                        to manage the risk of  changes in cash flows  related to
                        interest expense on  floating-rate  borrowings under its
                        Credit Agreement and the purchase of natural gas used in
                        its plants.

                        At  December  30,  2000,  the Company was party to three
                        interest  rate  swap  agreements  whereby  the  interest
                        obligation on $70 million of floating-rate debt has been
                        exchanged for fixed rate contracts  which bear interest,
                        payable  quarterly.  One swap  agreement for $25 million
                        matures June 27, 2002, bears interest at 6.5925% and the
                        Company's  receive  rate  is  based  on the  three-month
                        LIBOR. A second swap  agreement for $25 million  matured
                        June 27, 2001,  bore interest at 9.83% and the Company's
                        receive rate was based on the Base Rate.  The third swap
                        agreement for $20 million  matures June 27, 2002, with a
                        one-time option for the bank to cancel at June 27, 2001,
                        which the bank declined to exercise,  bears  interest at
                        9.17%  and the  Company's  receive  rate is based on the
                        Base  Rate.  Due  to  the  uncertainty  related  to  the
                        Company's  ability  to renew its Credit  Agreement  (see
                        Notes 2 and 9), the  portion of the  interest  rate swap
                        agreements   extending   beyond  June  30,   2001,   the
                        expiration  date  of  the  Credit  Agreement,   was  not
                        considered a hedge.  The Company recorded a liability of
                        $0.5  million at  December  30,  2000,  with the related
                        charge recorded in other expense.  The Company continues
                        to

                                     F-22


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

                        follow this policy in Fiscal 2001. At December 29, 2001,
                        the fair value of this  liability is $1.0  million.  The
                        Company  accounted  for the portion of the interest rate
                        swaps  through  June 30, 2001 as cash flow  hedges.  The
                        fair value of this  portion of the swaps was a liability
                        of $0.4 million at December 30, 2000.

                        At December 30, 2000 and through March 2001, the Company
                        was party to natural  gas swap  agreements  representing
                        approximately  300,000  mmbtu's of natural gas per month
                        for  January,  February  and March,  2001,  with a NYMEX
                        purchase  price  of   approximately   $4.682/mmbtu.   At
                        December  30,  2000,  the fair  value  of the  Company's
                        positions in these swap  agreements was an asset of $2.6
                        million.  All of the  Company's  positions in these swap
                        agreements  were  settled  during the three months ended
                        March 31,  2001,  and the Company no longer uses natural
                        gas swap agreements to manage its cash flow risk arising
                        from the purchase of natural gas used in its plants.

                        As  of  December  29,  2001,  the  Company  has  forward
                        purchase   agreements   in  place   for   purchases   of
                        approximately  1,500,000  mmbtu's of natural gas for the
                        period  January  through  December,  2002,  based  on an
                        average purchase price of $3.47/mmbtu.  These agreements
                        have  no  net  settlement  provisions  and  the  Company
                        intends  to take  physical  delivery,  which it has done
                        under similar  forward  purchase  agreements  from March
                        through December, 2001. Accordingly,  the agreements are
                        not subject to the requirements of Statement 133 because
                        they  qualify  as normal  purchases  as  defined  in the
                        standard.

                        The Company has designated the interest rate and natural
                        gas  swap  agreements  as  cash  flow  hedges  and  such
                        agreements  qualify for hedge accounting under Statement
                        133, except as described  above for certain  portions of
                        two  of  the  interest  rate  swaps.  A  summary  of the
                        transition  adjustment  recorded to other  comprehensive
                        income,    the   net   change   arising   from   hedging
                        transactions,  and the  amounts  recognized  in earnings
                        during the  twelve-month  period ended December 29, 2001
                        follows (in thousands):


                                                                                            

                           Transition adjustment on December 31, 2000
                             to accumulated other comprehensive income                         $   2,220

                           Net change arising from current period
                             hedging transactions                                                    376

                           Reclassifications into earnings                                        (2,576)
                                                                                               ----------

                           Accumulated other comprehensive
                             loss at December 29, 2001                                         $       -
                                                                                               ==========
                           A summary of the gains and losses recognized in
                             earnings during the year ended December 29, 2001
                             follows (in thousands):

                           Loss to interest expense related to
                             interest rate swap agreements                                     $    (487)

                           Gain to operating expenses related to
                             natural gas swap agreements (effective portion)                       2,568

                           Gain to other income related to
                             natural gas swap agreements (ineffective portion)                       515
                                                                                               ----------
                           Total reclassifications into earnings for the
                             year ended December 29, 2001                                      $   2,596
                                                                                               ==========


                                      F-23



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

                        Gains  and  losses   reported   in   accumulated   other
                        comprehensive income are reclassified into earnings upon
                        the  occurrence of the hedged  transactions  (accrual of
                        interest expense and purchase of natural gas).

                        The  entire  amount   reported  in   accumulated   other
                        comprehensive   income   as   of   December   31,   2000
                        (transition),  was  reclassified  into  earnings  by the
                        second quarter of Fiscal 2001.

                        There was no income  tax  expense  or  benefit  recorded
                        related to the derivative transactions described above.

                        For  Fiscal  2000 and 1999,  interest  rate  swaps  were
                        accounted  for under the  accrual  method,  whereby  the
                        difference  between the  Company's  pay and receive rate
                        was  recognized  as an  increase or decrease to interest
                        expense. The natural gas fixed for float swap agreements
                        to which the  Company was party  during  Fiscal 2000 are
                        traded on the NYMEX.  Realized  gains or losses from the
                        settlement of these financial  hedging  instruments were
                        recognized  as an  adjustment  of the cost of  purchased
                        natural gas in the month of delivery during Fiscal 2000.
                        The gains or losses realized as a result of these Fiscal
                        2000 hedging activities were substantially offset in the
                        cash market when the hedged natural gas was delivered to
                        the Company's facilities.

                  (16)  Comprehensive Income

                        The  Company  follows the  provisions  of  Statement  of
                        Financial   Accounting   Standards  No.  130,  Reporting
                        Comprehensive  Income  (Statement  130).  Statement  130
                        establishes  standards for reporting and presentation of
                        comprehensive  income and its components.  In accordance
                        with  Statement  130,  the  Company  has  presented  the
                        components of  comprehensive  income in its consolidated
                        statement of stockholders' equity.

                  (17)  Revenue Recognition

                        The Company  recognizes  revenue on sales when  products
                        are shipped and the customer takes ownership and assumes
                        risk of  loss.  Collection  fees are  recognized  in the
                        month the service is provided.

                  (18)  Reclassifications

                        Certain   immaterial    reclassifications   of   amounts
                        previously  reported  have been made to the Fiscal  2000
                        and Fiscal 1999  consolidated  financial  statements  to
                        conform the presentation for each year.

(2)      LIQUIDITY AND GOING CONCERN RISK

         The  accompanying  financial  statements  have been prepared on a going
         concern basis,  which  contemplates  the  realization of assets and the
         satisfaction of liabilities in the normal course of business.  As shown
         in the Consolidated Balance Sheet at December 29, 2001, the Company has
         $120.0 million of debt due under its bank credit facilities  classified
         as a current  liability  because the underlying  Credit Agreement had a
         maturity date of June 30, 2001.  Effective  June 29, 2001,  the Company
         entered into a series of forbearance agreements and amendments with the
         parties to its existing Credit  Agreement.  The forbearance  agreements
         and amendments,  among other things,  provide that the lenders will not
         exercise their remedies under the Credit Agreement for certain defaults
         until the  expiration  of the  forbearance  period  on April  30,  2002
         (subject to a proposed  amendment  to the  forbearance  agreement  that
         would  extend  the  forbearance  agreement  to May 31,  2002)  and will
         continue to make  revolving  loans to the  Company,  raise the interest
         rate under the Credit  Agreement  from 1% over prime to 3% over  prime,
         require  the  payment  of a fee of $3.9  million  to the  lenders  with
         respect to the forbearance agreements, reduce the commitment during the
         forbearance  period by $2.0  million,  from  $128.5  million  to $126.5
         million, and limit financial covenants to

                                      F-24



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)


         certain minimum cash flows, based upon the Company's own projected cash
         flow for certain periods during the forbearance period.

         On  March  15,  2002,  the  Company  entered  into  a  Recapitalization
         Agreement.  Under  the  terms of the  Recapitalization  Agreement,  the
         forbearance period is extended to April 30, 2002 (subject to a proposed
         amendment  to  the   forbearance   agreement   that  would  extend  the
         forbearance  agreement  to  May  31,  2002),  if  the  recapitalization
         transaction is  contemplated,  the Company will exchange the borrowings
         outstanding  under its  existing  Credit  Agreement,  a portion  of the
         accrued  interest and commitment fees, and forbearance fees payable for
         newly  issued  common  stock  equal  to  75%  of  the  Company's  total
         outstanding common shares on a fully-diluted  basis (exclusive of stock
         options issued and outstanding) and 6% cumulative  redeemable preferred
         stock with a face value of $10.0 million.  If the  recapitalization  is
         consummated,  a new  amended and  restated  credit  agreement  which is
         anticipated to result in borrowings under a term loan of $68.3 million,
         and a  revolving  credit  agreement  which will  enable the  Company to
         borrow up to $10.1 million. The consummation of the Recapitalization is
         subject to a number of conditions and termination rights.

         The accompanying  consolidated  financial statements have been prepared
         on a going concern basis,  which contemplates the realization of assets
         and the  satisfaction  of liabilities in the normal course of business.
         The  financial  statements  do not include any  adjustments  related to
         recoverability   and   classification  of  liabilities  that  might  be
         necessary  should the Company be unable to continue as a going concern.
         Because  the  Company  did not make the  principal  payments  under the
         credit  facility  when it matured on June 30,  2001,  the Company is in
         default under its existing  credit  agreement.  In connection  with the
         Recapitalization   Agreement,   the   Lenders   agreed  to  extend  the
         forbearance  period and not  exercise  their  remedies  until April 30,
         2002.  We have agreed in principle  with the Lenders on an amendment to
         the forbearance  agreement that would extend the forbearance  period to
         May 31, 2002 but this amendment has not been signed yet. If the Company
         is unable to  consummate  a new  financing  arrangement,  then,  in the
         absence of another business transaction or debt agreement,  the Company
         cannot  make the  principal  payment  due  under  the  existing  Credit
         Agreement and,  accordingly,  after the  expiration of the  forbearance
         period,  the lenders  could  exercise  their rights to realize upon the
         collateral  securing the debt (which  comprises  substantially  all the
         Company's assets). As a result of this material  uncertainty,  there is
         doubt about the Company's  ability to continue as a going concern.  The
         absence of a new financing  arrangement creates a material  uncertainty
         regarding  the ability of the  Company to continue as a going  concern.
         Management is not able to predict what the outcome or  consequences  of
         these matters might be.

(3)      INVENTORIES

         A summary of inventories follows (in thousands):

                                        December 29,      December 30,
                                             2001              2000
                                        ------------      ------------
     Finished product                       $  6,117         $  7,117
     Supplies and other                        1,581            1,183
                                            --------         --------
                                            $  7,698         $  8,300
                                            ========         ========


                                      F-25




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(4)      PROPERTY, PLANT AND EQUIPMENT

         A summary of property, plant and equipment follows (in thousands):

                                         December 29,      December 30,
                                             2001              2000
                                         ------------      ------------
    Land                                 $    9,454        $    9,871
    Buildings and improvements               25,906            27,272
    Machinery and equipment                 139,248           139,678
    Vehicles                                 49,084            48,041
    Construction in process                   6,607             4,324
                                         ----------         ---------
                                            230,299           229,186
    Accumulated depreciation                155,555           140,944
                                         ----------         ---------
                                         $   74,744         $  88,242
                                         ==========         =========

(5)      ASSETS HELD FOR SALE

         Assets held for sale consist of the following (in thousands):

                                         December 29,       December 30,
                                                2001             2000
                                         -----------        ------------
         Esteem (Norfolk, NE)            $    1,200         $   1,400
         Peptide (Norfolk, NE)                  500               862
         Petaluma, CA                           497                 -
         Billings, MT                           421               372
         West Point, NE                         118                 -
         Lynchburg, VA                          100                 -
         Shelbyville, VA                         62                 -
         Zanesville, VA                          54                 -
         Goldsboro, NC                           50                 -
         Milwaukee, WI                            -               527
                                         ----------         ---------
                                         $    3,002         $   3,161
                                         ==========         =========

         The Esteem  and  Peptide  assets are  principally  idle  machinery  and
         equipment.  Assets  at other  locations  are  either  closed  rendering
         facilities or closed transfer  stations  (locations where raw materials
         collected from  suppliers are aggregated and  transferred to processing
         plants) and consist  primarily  of land.  None of the above  assets was
         operated  during Fiscal 2001 and Fiscal 2000.  The effect of suspending
         depreciation  of these  assets was  approximately  $0.2 million in both
         Fiscal 2001 and 2000.

         As discussed in Note 1, the Company recorded impairment charges related
         to certain of the assets held for sale in Fiscal 2001,  Fiscal 2000 and
         Fiscal 1999.  Included in the Fiscal 2001 and 2000  impairment  charges
         are the following  amounts to reduce the carrying  value of assets held
         for sale to estimated net realizable value (in thousands):

                                         December 29,       December 30,
                                             2001              2000
                                         -----------        ------------
                       Esteem            $      210         $   1,083
                       Peptide                  439               258
                       Other assets             191                 -
                                         ----------         ---------

                         Total           $      840         $   1,341
                                         ==========         =========

                                      F-26



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         During Fiscal 2001,  management changed its assessment of the period of
         time  in  which  the  assets  held  for  sale  could  likely  be  sold.
         Accordingly,  the balance of assets held for sales is  classified  as a
         noncurrent asset at December 29, 2001. Management expects to dispose of
         the assets held for sale during Fiscal 2003.

(6)      OTHER ASSETS

         Other assets consist of the following (in thousands):

                                               December 29,     December 30,
                                                  2001             2000
                                            -----------------------------------
         Prepaid pension cost (Note 13)        $  2,359         $  2,054
         Deposits and other                       1,526              951
         Deferred recapitalization costs          3,762                -
                                                -------          -------
                                               $  7,647         $  3,005
                                                =======          =======
(7)      ACCRUED EXPENSES

         Accrued expenses consist of the following (in thousands):

                                                 December 29,   December 30,
                                                    2001           2000
                                                ----------------------------
Compensation and benefits                       $   6,750       $   4,093
Utilities and sewage                                3,944           3,981
Accrued plant expenses                              2,590           2,048
Accrued forbearance fees                            2,570               -
Insurance (Note 16)                                 2,604           6,004
Accrued freight cost                                1,208           1,053
Accrued interest rate swap liability                1,020             436
Accrued taxes                                         888           1,359
Reserve for environmental and litigation
  matters (Note 16)                                   599           1,149
Non-compete agreements                                363           1,620
Other accrued expense                               1,533           1,417
                                                 --------        --------
                                                 $ 24,069        $ 23,160
                                                  =======         =======

(8)      LEASES

         The  Company  leases five  plants and  storage  locations,  four office
         locations and a portion of its transportation equipment under operating
         leases.  Leases are  noncancellable and expire at various times through
         the year 2028. Minimum rental commitments under  noncancellable  leases
         as of December 29, 2001, are as follows (in thousands):

           Period Ending Fiscal               Operating Leases
           --------------------               ----------------

                 2002                            $   3,627
                 2003                                2,725
                 2004                                2,086
                 2005                                1,335
                 2006                                  515
                 Thereafter                          8,504
                                                   -------
                   Total                          $ 18,792
                                                    ======

         Rent expense for the years ended December 29, 2001,  December 30, 2000,
         and January 1, 2000 was $4.2  million,  $3.2 million and $2.6  million,
         respectively.


                                      F-27



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(9)      DEBT

         Debt consists of the following (in thousands):

                                            December 29,     December 30,
                                                2001             2000
                                         -----------------------------------
        Credit Agreement:
            Revolving Credit Facility        $120,027         $109,498
            Term Loan                               -                -
        Other notes                                26               30
                                             --------         --------
                                              120,053          109,528
        Less current maturities               120,053          109,528
                                             --------         --------
                                             $      -         $      -
                                             ========         ========

         See the discussion regarding Liquidity and Going Concern Risk in Note


2.       CREDIT AGREEMENT

         Effective  June 5, 1997,  the Company  entered into a Credit  Agreement
         (the "Credit  Agreement")  which originally  provided for borrowings in
         the form of a $50,000,000 Term Loan and  $175,000,000  Revolving Credit
         Facility.  On October 3, 1998, the Company entered into an amendment of
         the Credit Agreement whereby BankBoston,  N.A., as agent, and the other
         participant  banks in the  Credit  Agreement  (the  "Banks")  agreed to
         forbear  from  exercising  rights and  remedies  arising as a result of
         several existing events of default of certain financial  covenants (the
         "Defaults") under the Credit Agreement,  as amended,  until November 9,
         1998.

         On  November 6, 1998,  the Company  entered  into an  extension  of the
         amended  Credit  Agreement  whereby  the Banks  agreed to forbear  from
         exercising  rights and  remedies  arising  as a result of the  Defaults
         until  December  14,  1998.  The  forbearance  period was  subsequently
         extended to January 22, 1999. On January 22, 1999,  the Company and the
         banks amended and restated the Credit Agreement.

         The Credit Agreement,  as amended,  provided for borrowings in the form
         of a $36,702,000 Term Loan and $135,000,000  Revolving Credit Facility.
         At  December  30,  2000,  the Term  Loan had been  paid in full and the
         availability  under the revolver was $128.5 million.  Substantially all
         assets of the Company are either pledged or mortgaged as collateral for
         borrowings under the Credit  Agreement.  The Credit Agreement  contains
         certain terms and covenants,  which, among other matters,  restrict the
         incurrence of additional  indebtedness,  the payment of cash dividends,
         the retention of certain proceeds from sales of assets,  and the annual
         amount of capital expenditures, and requires the maintenance of certain
         minimum financial ratios.

         As shown in the  Consolidated  Balance Sheet at December 29, 2001,  the
         Company has $120.0 million of debt due under its bank credit facilities
         classified  as  a  current  liability  because  the  underlying  Credit
         Agreement had an expiration  date of June 30, 2001.  Effective June 29,
         2001, the Company  entered into a series of forbearance  agreements and
         amendments  with the  parties to its  existing  Credit  Agreement.  The
         forbearance agreements and amendments, among other things, provide that
         the lenders will not exercise their remedies under the Credit Agreement
         for  certain  defaults  until  April 30,  2002  (subject  to a proposed
         amendment  to  the   forbearance   agreement   that  would  extend  the
         forbearance  agreement  to May 31,  2002)  and  will  continue  to make
         revolving  loans to the  Company,  raise the  interest  rate  under the
         Credit  Agreement  from 1% over  prime to 3% over  prime,  require  the
         payment of a fee of $3.9  million to the  lenders  with  respect to the
         forbearance  agreements,  reduce the commitment  during the forbearance
         period by $2.0  million,  from $128.5  million to $126.5  million,  and
         limit financial covenants to certain minimum cash flows, based upon the
         Company's  own  projected  cash flow for  certain  periods  during  the
         forbearance period.

         On  March  15,  2002,  the  Company  entered  into  a  Recapitalization
         Agreement.  Under  the  terms of the  Recapitalization  Agreement,  the
         forbearance period is extended to April 30, 2002 (subject to a proposed


                                      F-28



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         amendment  to  the   forbearance   agreement   that  would  extend  the
         forbearance  agreement to May 31,  2002),  and if the  recapitalization
         transaction  is  consummated,  the Company will exchange the borrowings
         outstanding under its existing Credit Agreement,  accrued interest, and
         forbearance  fees payable for newly issued common stock equal to 75% of
         the Company's total outstanding common shares on a fully-diluted  basis
         (exclusive of stock options issued and  outstanding)  and 6% cumulative
         redeemable  preferred  stock  with a face value of $10.0  million.  The
         Company and its lenders will use their best efforts to consummate a new
         Credit  Agreement which is anticipated to result in borrowings  under a
         senior  term loan of $68.3  million and a  revolving  credit  agreement
         which will enable the Company to borrow up to $10.1 million.

(10)     OTHER NONCURRENT LIABILITIES

         Other noncurrent liabilities consist of the following (in thousands):

                                                 December 29,     December 30,
                                                     2001             2000
                                             ----------------------------------
    Reserve for insurance, environmental,
      litigation and tax matters (Note 16)        $  7,184          $13,214
    Liabilities associated with consulting and
      noncompete agreements                            758            2,868
    Other                                              192              165
                                                  --------         --------
                                                  $  8,134          $16,247
                                                   =======           ======

         During  Fiscal  2001,  the Company made cash  payments  under letter of
         credit  arrangements to its insurance claims  administrator  and to one
         party to a  noncompete  agreement  of $5.9  million  and $1.8  million,
         respectively.

         The Company  sponsors a defined  benefit health care plan that provides
         postretirement   medical  and  life   insurance   benefits  to  certain
         employees.  The  Company  accounts  for this  plan in  accordance  with
         Statement of Financial  Accounting  Standards No. 106 and the effect on
         the  Company's   financial   position  and  results  of  operations  is
         immaterial.

(11)     INCOME TAXES

         Income  tax  expense  (benefit)  attributable  to  income  (loss)  from
         continuing operations before income taxes consists of the following (in
         thousands):


                              December 29,     December 30,       January 1,
                                  2001             2000              2000
                           ----------------------------------------------------
         Current:
              Federal         $        -       $        -         $      -
              State                    -                -                -
              Foreign                  -                -                -
         Deferred:
              Federal                  -                -           (9,183)
              State                    -                -             (796)
              Foreign                  -                -              (36)
                               ---------        ---------         --------
                              $        -       $        -         $(10,015)
                               =========        =========          =======

         Income tax benefit for the years ended December 29, 2001,  December 30,
         2000,  and  January  1, 2000,  differed  from the  amount  computed  by
         applying the statutory U.S.  federal income tax rate (35%) to loss from
         continuing  operations before income taxes as a result of the following
         (in thousands):




                                      F-29



                                DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                           Notes to Consolidated Financial Statements (continued)


                                                                                  

                                                         December 29,      December 30,     January 1,
                                                             2001              2000            2000
                                                       ---------------------------------------------------
  Computed "expected" tax benefit                         $ (4,146)         $ (6,846)        $ (9,000)
  State income taxes, net of federal effect                      -                 -             (517)
  Change in valuation allowance                              4,289             7,554             (311)
  Other, net                                                  (143)             (708)            (187)
                                                          ---------         --------        ---------
                                                        $         -      $          -        $(10,015)
                                                         ==========       ===========         =======


         The tax effects of temporary  differences that give rise to significant
         portions of the deferred tax assets and  deferred  tax  liabilities  at
         December  29,  2001 and  December  30,  2000 are  presented  below  (in
         thousands):



                                                                                     
                                                                          December 29,     December 30,
                                                                              2001             2000
                                                                        -----------------------------------
    Deferred tax assets:
      Net operating loss carryforwards                                      $  34,208        $  35,668
      Capital loss carryforwards                                                    -                -
      Loss contingency reserves                                                 4,229            5,457
      Other                                                                     1,753            1,314
                                                                            ---------        ---------
                Total gross deferred tax assets                                40,190           42,439
                Less valuation allowance                                      (25,994)         (21,705)
                                                                             --------         --------
                Net deferred tax assets                                        14,196           20,734
                                                                             --------         --------
    Deferred tax liabilities:
      Collection routes and contracts                                          (5,250)          (6,926)
      Property, plant and equipment                                            (8,016)         (13,023)
      Other                                                                      (717)            (572)
                                                                            ---------        ---------
                Total gross deferred tax liabilities                          (13,983)         (20,521)
                                                                              -------          -------
                                                                           $      213       $      213
                                                                            =========        =========


         The portion of the deferred tax assets and  liabilities  expected to be
         recognized  in Fiscal 2001 has been  recorded at December 29, 2001,  in
         the accompanying  consolidated  balance sheet as a net current deferred
         income tax asset of $2,203,000.  The remaining non-current deferred tax
         assets and liabilities  have been recorded as a net deferred income tax
         liability  of  $1,990,000  at  December  29,  2001 in the  accompanying
         consolidated balance sheet.

         The valuation allowance for deferred tax assets as of December 29, 2001
         and December 30, 2000 was  $25,994,000 and  $21,705,000,  respectively.
         The net  changes in the total  valuation  allowance  was an increase of
         $4,289,000  for the year ended  December  29,  2001 and an  increase of
         $7,554,000 for the year ended December 30, 2000 . The Company  believes
         that the remaining net deferred tax assets at December 29, 2001 will be
         realized   primarily  through  future  reversals  of  existing  taxable
         temporary differences.

         At December 29, 2001, the Company had net operating loss  carryforwards
         for federal income tax purposes of approximately  $90,020,000 which are
         available to offset future  federal  taxable  income  through 2019. The
         availability of the net operating loss  carryforwards  to reduce future
         taxable  income is subject to various  limitations.  As a result of the
         change in ownership,  the Company believes  utilization of its pre-1994
         net operating loss carryforwards ($72,280,000) is limited to $3,400,000
         per year for the remaining life of the net operating losses.

(12)     STOCKHOLDERS' EQUITY

         At December 29, 1993, the Company granted  options to purchase  384,615
         shares  of the  Company's  common  stock to the  former  owners  of the
         Redeemable  Preferred  Stock. The options have a term of ten years from
         the date of grant  and may be  exercised  at a price of $3.45 per share
         (approximated market value at the date of grant).


                                      F-30



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         The 1993  Flexible  Stock  Option Plan and the 1994  Employee  Flexible
         Stock  Option  Plan  provide for the  granting of stock  options to key
         officers  and salaried  employees of the Company and its  subsidiaries.
         Options to purchase common stock were granted at a price  approximating
         fair market value at the date of grant. Options granted under the plans
         expire  ten  years  from  the date of  grant.  Vesting  occurs  on each
         anniversary  of the  grant  date  as  defined  in the  specific  option
         agreement.  The plans also provide for the  acceleration by one year of
         vesting of all non-vested shares upon the termination of the employee's
         employment  in  certain  circumstances  or upon a change in  management
         control.

         The Non-Employee  Directors Stock Option Plan provides for the granting
         of options to non-employee directors of the Company. As of December 29,
         2001,  options  to  purchase  703,385  shares of common  stock had been
         granted  pursuant to this plan.  The  options  have a term of ten years
         from  the  date of  grant  and may be  exercised  at a price of $1.75 -
         $9.042 per share (market value at the date of grant).  The options vest
         25% six months  after the grant date and 25% on each  anniversary  date
         thereafter.

         The per share  weighted  average  fair value of stock  options  granted
         during 2001, 2000 and 1999 was $0.46, $1.65 and $5.57, respectively, on
         the date of grant using the Black Scholes option-pricing model with the
         following weighted assumptions:



                                                                                 

                                                        2001               2000               1999
                                                 --------------------------------------------------------
           Expected dividend yield                      0.0%               0.0%               0.0%
           Risk-free interest rate                     5.14%               5.28%             6.38%
           Expected life                              10 years           10 years           10 years
           Expected annual volatility              42.31-100.94%       42.31-98.64%       62.41-66.59%



         The Company applies APB Opinion No. 25 in accounting for its Plans and,
         accordingly,  no  compensation  cost has been  recognized for its stock
         options in the  financial  statements  as stock options were granted at
         market value on the grant date. Had the Company determined compensation
         cost based on the fair  value at the grant  date for its stock  options
         under SFAS No. 123,  the  Company's  earnings  (loss)  from  continuing
         operations  would have been reduced to the pro forma amounts  indicated
         below (in thousands, except per share):



                                                                                  

                                                                     2001          2000          1999
                                                                 -----------------------------------------
           Net loss
                                              As reported          $(11,845)     $(19,189)    $(16,033)
                                              Pro forma            $(12,132)     $(20,415)    $(16,534)
           Basic loss per common share
                                              As reported           $(0.76)       $(1.23)      $(1.03)
                                              Pro forma             $(0.78)       $(1.31)      $(1.06)









                                      F-31




                                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                             Notes to Consolidated Financial Statements (continued)

                        A summary of transactions for all stock options granted follows:


                                                                                 

                                                         Number of     Option exercise       Weighted-avg.
                                                          shares       price per share    exercise price per
                                                                                                 share
                                                      --------------------------------------------------------
      Options outstanding at January 2, 1999            3,078,322       $2.86-10.88          $6.05
            Granted                                       111,000        1.75-2.63            2.12
            Canceled                                     (952,687)      2.63-10.29            6.43
                                                       ----------
      Options outstanding at January 1, 2000            2,236,635       1.75-10.88            5.69
                                                        =========
            Granted                                     1,129,050        0.50-1.75            1.11
            Canceled                                   (1,031,305)     2.625-10.875           7.74
                                                       ----------
      Options outstanding at December 30, 2000          2,334,380        0.50-9.50            2.43
                                                        =========
            Granted                                       703,385          0.50               0.50
            Canceled                                      (11,900)      4.125-9.50            6.38
      Options outstanding at December 29, 2001          3,025,865       0.50-9.042            2.08
                                                        =========
      Options exercisable at December 29, 2001          2,407,867       0.50-9.042           $2.46
                                                        =========


         At December 29, 2001, the range of exercise prices and weighted-average
         remaining  contractual life of outstanding  options was $0.50-9.042 and
         7.5 years, respectively.

         At  December  29, 2001 and  December  30,  2000,  the number of options
         exercisable  was  2,407,867  and  2,253,590,   respectively,   and  the
         weighted-average  exercise  price of those options was $2.46 and $2.43,
         respectively.

(13)     EMPLOYEE BENEFIT PLANS

         The Company has retirement and pension plans covering substantially all
         of its employees.  Most retirement benefits are provided by the Company
         under separate final-pay noncontributory pension plans for all salaried
         and hourly employees (excluding those covered by union-sponsored plans)
         who meet service and age  requirements.  Benefits are based principally
         on length of  service  and  earnings  patterns  during  the five  years
         preceding retirement.

         The Company's funding policy for those plans is to contribute  annually
         not less than the  minimum  amount  required  nor more than the maximum
         amount  that  can  be  deducted  for  federal   income  tax   purposes.
         Contributions are intended to provide not only for benefits  attributed
         to  service  to date but also for  those  expected  to be earned in the
         future.

         The  following  table sets forth the plans'  funded  status and amounts
         recognized in the Company's  consolidated  balance  sheets based on the
         measurement date (October 1, 2001 and 2000) (in thousands):





                                      F-32




                                 DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                            Notes to Consolidated Financial Statements (continued)

                                                                                   

                                                                    December 29,          December 30,
                                                                        2001                  2000
                                                                --------------------------------------------
       Change in benefit obligation:
            Benefit obligation at beginning of year                     $45,404              $45,991
            Service cost                                                  1,305                1,478
            Interest cost                                                 3,425                3,363
            Amendments                                                      301                    -
            Actuarial (gain)/loss                                         1,541               (2,973)
            Benefits paid                                                (2,515)              (2,455)
                                                                        -------              -------
              Benefit obligation at end of year                          49,461               45,404
                                                                         ------               ------

       Change in plan assets:
            Fair value of plan assets at beginning of year               48,881               46,683
            Actual return on plan assets                                 (4,727)               4,052
            Employer contribution                                           710                  601
            Benefits paid                                                (2,515)              (2,455)
                                                                        -------              -------
              Fair value of plan assets at end of year                   42,349               48,881
                                                                         ------               ------

       Funded status                                                     (7,112)               3,477
       Unrecognized actuarial (gain)/loss                                 8,543               (2,148)
       Unrecognized prior service cost                                      928                  725
                                                                       --------             --------
            Net amount recognized                                      $  2,359             $  2,054
                                                                        =======              =======
       Amounts recognized in the consolidated balance sheets consist of:
               Prepaid benefit cost                                      $2,359               $2,054
               Accrued benefit liability                                   (713)                   -
               Intangible asset                                             180                    -
               Accumulated other comprehensive income                       533                    -
                                                                         ------             --------
                     Net amount recognized                               $2,359               $2,054
                                                                          =====                =====



       During  December 2001, the Company's  pension plans received common stock
       resulting  from  the  demutualization  of an  insurance  company  with an
       aggregate  fair value of $4.0 million  which has been  considered  in the
       determination of the amount of minimum liability reported at December 29,
       2001.  Since the  common  stock was  received  after the  October 1, 2001
       measurement  date, it is not included in the fair value of plan assets at
       end of year  in the  table  above.  The  common  stock  received  will be
       considered an asset of the plans for purposes of determining  Fiscal 2002
       net pension cost.

       Net pension cost includes the following components (in thousands):




                                                                                      
                                                              December 29,     December 30,    January 1,
                                                                  2001             2000          2000
                                                            ----------------------------------------------------
      Service cost                                              $1,305           $1,478         $1,781
      Interest cost                                              3,425            3,363          3,110
      Expected return on plan assets                            (4,424)          (4,217)        (3,894)
      Net amortization and deferral                                 98               98             73
                                                               -------          -------         ------
                      Net pension cost                         $   404          $   722         $1,070
                                                                ======           ======         ======







                                      F-33



                                    DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                               Notes to Consolidated Financial Statements (continued)

         Assumptions used in accounting for the employee benefit pension plans
were:

                                                                                           

                                                              December 29,       December 30,       January 1,
                                                                   2001              2000              2000
                                                            ------------------------------------------------------
          Weighted average discount rate                          7.50%             7.75%              7.50%
          Rate of increase in future compensation levels          5.16%             5.08%              5.17%
          Expected long-term rate of return on assets             9.25%             9.25%              9.25%



       The Company  participates in several  multi-employer  pension plans which
       provide defined benefits to certain employees covered by labor contracts.
       These plans are not  administered  by the Company and  contributions  are
       determined in accordance with provisions of negotiated  labor  contracts.
       Information  with  respect to the  Company's  proportionate  share of the
       excess, if any, of the actuarially computed value of vested benefits over
       these pension plans' net assets is not available.  The cost of such plans
       amounted to  $1,491,000,  $1,384,000  and  $1,306,000 for the years ended
       December 29, 2001, December 30, 2000, and January 1, 2000, respectively.

(14)   CONCENTRATION OF CREDIT RISK

       Concentration of credit risk is limited due to the Company's  diversified
       customer base and the fact that the Company sells commodities.  No single
       customer  accounted for more than 10% of the Company's net sales in 2001,
       2000 and 1999.

(15)   DISCONTINUED OPERATIONS

       In 1998, the Company made a decision to discontinue the operations of the
       Bakery By-Products Recycling business segment in order to concentrate its
       financial and human  resources on its other  businesses.  The disposal of
       this business was accounted for as a discontinued operation.  Gain (loss)
       on disposal relates to an adjustment of the indemnification  liability in
       Fiscal  1999  and   write-off  of  the  liability  in  Fiscal  2000  upon
       termination of the indemnification period.

(16)   CONTINGENCIES

       LITIGATION
       Melvindale

       A group of residents living near the Company's Melvindale, Michigan plant
       has filed  suit,  purportedly  on behalf of a class of persons  similarly
       situated.  The class has been certified for  injunctive  relief only. The
       court declined to certify a damage class but has permitted  approximately
       300 people to join the lawsuit as plaintiffs.  The suit is based on legal
       theories of trespass,  nuisance and negligence  and/or gross  negligence,
       and is pending in the United States District Court,  Eastern  District of
       Michigan. Plaintiffs allege that emissions to the air, particularly odor,
       from the  plant  have  reduced  the value and  enjoyment  of  Plaintiffs'
       property,  and Plaintiffs  seek  unspecified  compensatory  and exemplary
       damages in an amount in excess of $25,000 per plaintiff  and  unspecified
       injunctive  relief.  The  Company  is unable to  estimate  its  potential
       liability  from  this  lawsuit.   In  a  lawsuit  with  similar   factual
       allegations,  also  pending  in United  States  District  Court,  Eastern
       District of Michigan,  the City of Melvindale  has filed suit against the
       Company based on legal  theories of nuisance,  trespass,  negligence  and
       violation  of  Melvindale   nuisance   ordinances   seeking  damages  and
       declaratory and injunctive  relief.  The court has dismissed the trespass
       counts in both  lawsuits,  and all of the damage claims in the suit filed
       by the City of Melvindale have been dismissed. The City of Melvindale now
       seeks unspecified injunctive relief. The Company or its predecessors have
       operated a rendering  plant at the  Melvindale  location  since 1927 in a
       heavily  industrialized area down river south of Detroit. The Company has
       taken and is taking all reasonable  steps to minimize odor emissions from
       its recycling processes and is defending the lawsuit vigorously.


                                      F-34



       Long Island City, NY

       The  Company  is  a  party  to  a  lawsuit   that  seeks  to  require  an
       environmental  cleanup at a property in Long Island City,  New York where
       the Company  formerly  operated a  rendering  plant  (referred  to as the
       "Site").  DMJ Associates  (DMJ),  which holds a mortgage on the Site, has
       filed suit against the Company, as a former owner of the Site, as well as
       others including the present tenants and operators of the Site, the owner
       of an abandoned  hazardous  waste  disposal site  adjoining the Site (the
       "Disposal  Facility"),  and  companies  that  disposed  of  wastes at the
       Disposal  Facility (the "Generator  Defendants").  DMJ argues that, inter
       alia,  under  federal law it is  entitled to relief  directed to have the
       defendants  remediate  the  contamination.  DMJ seeks both  equitable and
       monetary  relief from all  defendants  for  investigation,  abatement and
       remediation of the Site. DMJ has not yet provided information  sufficient
       for the Company to ascertain the magnitude or amount of DMJ's total claim
       nor the Company's  alleged  share  thereof.  As a result,  the Company is
       unable to estimate its potential liability from this lawsuit. The Company
       does not have information  suggesting that it contributed in any material
       way to any  contamination  that may exist at the  Site.  The  Company  is
       actively  defending  the suit and is  awaiting a decision  on a motion on
       summary judgment regarding the standing of the plaintiff.

       Sauget, Illinois

       The Company is a party to a lawsuit that seeks to recover  costs  related
       to an  environmental  cleanup  in or near  Sauget,  Illinois.  The United
       States had filed a complaint against Monsanto Chemical Company,  Solutia,
       Inc.,  Anheuser-Busch,  Inc.,  Union Electric,  and 14 other  defendants,
       seeking to recover  cleanup costs.  Monsanto (which merged with Pharmacia
       and Upjohn,  Inc in 2000 and is now known as Pharmacia  Corporation)  and
       Solutia in turn filed a third party complaint  seeking  contribution from
       the United States, several federal agencies,  and six more companies,  in
       addition to the Company.  As potentially  responsible parties themselves,
       Pharmacia  and Solutia are seeking to recover  unspecified  proportionate
       shares from each of the other parties,  in addition to the Company, of an
       as yet  undetermined  total cleanup cost. A subsidiary of the Company had
       operated an inorganic  fertilizer plant in Sauget,  Illinois for a number
       of years prior to closing it in the 1960's. The Company is defending this
       case  vigorously,  and does not believe,  based upon currently  available
       information, that the fertilizer plant contributed in any significant way
       to the  contamination  that is leading to the environmental  cleanup,  or
       that its share,  if any,  of the cost of the  cleanup  will be  material.
       Accordingly,  the Company is unable to estimate its  potential  liability
       from this lawsuit.

       Other Litigation

       The Company is also a party to several  other  lawsuits,  claims and loss
       contingencies incidental to its business, including assertions by certain
       regulatory agencies related to air, wastewater, and stormwater discharges
       from the Company's processing facilities.


       Self Insured Risks

       The  Company  purchases  its  workers  compensation,   auto  and  general
       liability  insurance on a  retrospective  basis.  The Company accrues its
       expected  ultimate costs related to claims  occurring  during each fiscal
       year and carries this accrual as a reserve  until such claims are paid by
       the Company.

       The Company has  established  loss reserves for insurance,  environmental
       and  litigation  matters  as a result  of the  matters  discussed  above.
       Although the ultimate  liability  cannot be  determined  with  certainty,
       management of the Company  believes that reserves for  contingencies  are
       reasonable and sufficient based upon present governmental regulations and
       information  currently available to management.  The accrued expenses and
       other   noncurrent   liabilities   classifications   in   the   Company's
       consolidated balance sheets include reserves for insurance, environmental
       and  litigation  contingencies  of $10.6  million  and $20.4  million  at
       December 29, 2001 and December  30, 2000,  respectively.  There can be no
       assurance,  however,  that final costs  related to these matters will not
       exceed  current  estimates.  The  Company  believes  that any  additional
       liability  relative  to lawsuits  and claims  which may not be covered by
       insurance would not likely have a material adverse effect on the


                                      F-35


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

       Company's  financial  position,  although  it  could  potentially  have a
       material impact on the results of operations in any one year.


(17)   BUSINESS SEGMENTS

       The Company  operates on a worldwide basis within two industry  segments:
       Rendering and Restaurant  Services.  The measure of segment profit (loss)
       includes all revenues, operating expenses (excluding certain amortization
       of  intangibles),   and  selling,  general  and  administrative  expenses
       incurred  at all  operating  locations  and  excludes  general  corporate
       expenses.

                  Rendering
                  ---------

                  Rendering  consists of the collection and processing of animal
                  by-products from butcher shops, grocery stores and independent
                  meat and  poultry  processors,  converting  these  wastes into
                  similar products such as useable oils and proteins utilized by
                  the agricultural and oleochemical industries.

                  Restaurant Services
                  -------------------

                  Restaurant Services consists of the collection of used cooking
                  oils from restaurants and recycling them into similar products
                  such as  high-energy  animal feed  ingredients  and industrial
                  oils. Restaurant Services also provides grease trap servicing.

Included  in  corporate  activities  are  general  corporate  expenses  and  the
amortization  of  intangibles  related  to "Fresh  Start  Reporting."  Assets of
corporate  activities include cash,  unallocated prepaid expenses,  deferred tax
assets, prepaid pension, and miscellaneous other assets.


      Business Segment Net Revenues (in thousands):
      -----------------------------



                                                                                         

                                                                December 29,      December 30,    January 1,
                                                                    2001              2000           2000
                                                              ----------------------------------------------------
                Rendering:
                   Trade                                           $194,960          $186,445         $204,631
                   Intersegment                                      31,182            26,011           27,970
                                                                   --------          --------         --------
                                                                    226,142           212,456          232,601
                                                                    -------           -------          -------
                Restaurant Services:
                   Trade                                             61,014            56,350           53,939
                   Intersegment                                       6,854             7,781            7,204
                                                                  ---------         ---------        ---------
                                                                     67,868            64,131           61,143
                                                                   --------          --------         --------

                Eliminations                                        (38,036)          (33,792)         (35,174)
                                                                   --------          --------          -------
                Total                                              $255,974          $242,795         $258,570
                                                                    =======           =======          =======


Business Segment Profit (Loss)  (in thousands):
-----------------------------


                                                                                         

                                                                December 29,      December 30,    January 1,
                                                                    2001              2000            2000
                                                              -----------------------------------------------------

                Rendering                                         $14,000         $   8,170        $   3,249
                Restaurant Services                                 7,436             3,487              922
                Corporate Activities                              (19,119)          (17,246)         (15,882)
                Interest expense                                  (14,162)          (13,971)         (14,004)
                                                                  --------          -------          -------
                Loss from continuing operations
                   before income taxes                           $(11,845)         $(19,560)        $(25,715)
                                                                  =======           =======          =======

                                      F-36



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)



Certain assets are not  attributable to a single  operating  segment but instead
relate to multiple  operating  segments  operating out of individual  locations.
These assets are utilized by both the Rendering and Restaurant Services business
segments  and  are  identified  in  the  category  Combined  Rend./Rest.   Svcs.
Depreciation  of Combined  Rend./Rest.  Svcs.  assets is allocated based upon an
estimate of the percentage of corresponding activity attributed to each segment.
Additionally,  although  intangible assets are allocated to operating  segments,
the  amortization  related to the  adoption of "Fresh  Start  Reporting"  is not
considered in the measure of operating  segment profit (loss) and is included in
Corporate Activities.



Business Segment Assets (in thousands):
-----------------------


                                                                                           

                                                                                December 29,     December 30,
                                                                                    2001             2000
                                                                              -----------------------------------
             Rendering                                                          $  56,847        $  64,199
             Restaurant Services                                                   14,779           17,290
             Combined Rend./Rest. Svcs.                                            64,155           72,722
             Corporate Activities                                                  23,298           20,294
                                                                                 --------         --------
             Total                                                               $159,079         $174,505
                                                                                  =======          =======



Business Segment Property, Plant and Equipment (in thousands):
----------------------------------------------



                                                                                          

                                                                              December 29,      December 30,
                                                                                  2001              2000
                                                                            -----------------------------------
           Depreciation and amortization:
             Rendering                                                          $17,823           $21,531
             Restaurant Services                                                  6,333             6,323
             Corporate Activities                                                 2,478             3,327
                                                                                -------           -------
           Total                                                                $26,634           $31,181
                                                                                 ======            ======
           Additions:
             Rendering                                                         $  3,327          $  2,168
             Restaurant Services                                                  1,544             2,897
             Combined Rend./Rest. Svcs.                                           1,292             2,159
             Corporate Activities                                                 2,979               460
                                                                                -------          --------
           Total                                                               $  9,142          $  7,684
                                                                                =======           =======











                                      F-37



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

The  Company has no material  foreign  operations,  but exports a portion of its
products to customers in various foreign countries.

Geographic Area Net Trade Revenues (in thousands):
----------------------------------



                                                                                        

                                                             December 29,     December 30,       January 1,
                                                                 2001             2000              2000
                                                           ----------------------------------------------------
        United States                                         $117,849         $114,102          $151,165
        Korea                                                    3,538            6,041            13,029
        Spain                                                      388              963             1,798
        Mexico                                                  23,390           25,090            19,320
        Japan                                                    1,075            1,916             2,162
        N. Europe                                                1,444              707             2,095
        Pacific Rim                                              9,838              889             9,008
        Taiwan                                                     552            1,775             2,415
        Canada                                                     993              864               580
        Latin/South America                                      9,192           13,408            13,413
        Other/Brokered                                          87,715           77,040            43,585
                                                              --------         --------          --------
        Total                                                 $255,974         $242,795          $258,570
                                                               =======          =======           =======



       Other/Brokered  trade revenues  represent  product for which the ultimate
       destination is not monitored.


(18)   QUARTERLY FINANCIAL DATA (UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE
       AMOUNTS):



                                                               Year Ended December 29, 2001
                                             ------------------------------------------------------------------
                                                                                   


                                              First Quarter   Second Quarter   Third Quarter   Fourth Quarter
        Net sales                                   $63,634        $58,614           $65,045         $68,681
        Operating income (loss)                       1,503         (1,342)              942           2,865
        Loss from continuing operations              (1,149)        (5,721)           (3,519)         (1,456)
        Net loss                                     (1,149)        (5,721)           (3,519)         (1,456)
        Basic loss per share                          (0.07)         (0.37)            (0.23)          (0.09)
        Diluted loss per share                        (0.07)         (0.37)            (0.23)          (0.09)





                                                                                   
                                                               Year Ended December 30, 2000
                                             ------------------------------------------------------------------
                                              First Quarter   Second Quarter   Third Quarter   Fourth Quarter
        Net sales                                   $62,818        $61,557           $57,629         $60,791
        Operating income (loss)                         194         (1,200)           (1,550)         (2,849)
        Loss from continuing operations              (3,026)        (4,766)           (5,169)         (6,599)
        Discontinued operations -
           Gain on disposal                               -            121                 -             250
        Net loss                                     (3,026)        (4,645)           (5,169)         (6,349)
        Basic loss per share                          (0.19)         (0.30)            (0.33)          (0.41)
        Diluted loss per share                        (0.19)         (0.30)            (0.33)          (0.41)







                                      F-38



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(19)   RECENTLY ISSUED ACCOUNTING STANDARDS

       Recently,   the  Financial   Accounting  Standards  Board  (FASB)  issued
       Statement   of  Financial   Accounting   Standards   No.  141,   Business
       Combinations (Statement 141), Statement of Financial Accounting Standards
       No. 142, Goodwill and Other Intangible Assets (Statement 142),  Statement
       of  Financial   Accounting   Standards  No.  143,  Accounting  for  Asset
       Retirement  Obligations  (Statement  143),  and  Statement  of  Financial
       Accounting  Standards No. 144,  Accounting for the Impairment or Disposal
       of Long-Lived Assets (Statement 144).

       Statement 141 requires  that all business  combinations  initiated  after
       June 30, 2001 be accounted for under the purchase  method.  Statement 141
       also specifies the criteria that intangible assets acquired in a business
       combination  must meet to be recognized and reported apart from goodwill.
       The Company does not believe Statement 141 will have a significant impact
       on its  consolidated  financial  statements.  Statement 142 requires that
       goodwill  and  intangible  assets  with  indefinite  lives no  longer  be
       amortized,  but  instead  be tested  for  impairment  at least  annually.
       Statement 142 also requires that intangible  assets with estimated useful
       lives be amortized over their respective  useful lives to their estimated
       residual values, and reviewed for impairment.  Statement 142 is effective
       for fiscal years beginning after December 15, 2001.  Amortization expense
       related to goodwill  that will not be amortized  under  Statement 142 was
       $242,000,   $142,000  and  $228,000  for  Fiscal  2001,  2000  and  1999,
       respectively.  Because  of the  extensive  effort  needed to comply  with
       adopting Statement 142, it is not practicable to reasonably  estimate the
       impact of adopting  this  standard at the date of this report,  including
       whether we will be  required to  recognize  any  transitional  impairment
       losses as the cumulative effect of a change in accounting principle.

       Statement 143  establishes  requirements  for the  accounting for removal
       costs associated with asset retirements and is effective for fiscal years
       beginning  after June 15, 2002,  with earlier  adoption  encouraged.  The
       Company  is  currently  assessing  the  impact  of  Statement  143 on its
       consolidated  financial  statements.  Statement 144 supercedes  Statement
       121,  Accounting  for the  Impairment  of Long Lived  Assets and for Long
       Lived  Assets  to be  Disposed  Of,  and  the  accounting  and  reporting
       provisions of Accounting  Principles  Board Opinion No. 30, Reporting the
       Results of Operations,  Reporting the Effects of Disposal of a Segment of
       a Business, and Extraordinary,  Unusual and Infrequently Occurring Events
       and  Transactions.  Statement 144 retains the  fundamental  provisions of
       Statement 121 but eliminates the requirement to allocate goodwill to long
       lived assets to be tested for  impairment.  Statement  144 also  requires
       discontinued  operations to be carried at the lower of cost or fair value
       less  costs  to  sell  and  broadens  the  presentation  of  discontinued
       operations to include a component of an entity rather than a segment of a
       business.  Statement  144 is effective for fiscal years  beginning  after
       December  15,  2001 and  interim  periods  within  those years with early
       adoption  encouraged.  The  Company  does  not  expect  the  adoption  of
       Statement  144 to have a material  impact on its  consolidated  financial
       statements.








                                      F-39




SCHEDULE II


                                          Valuation and Qualifying Accounts
                                                    (In thousands)

                                                                                          

                                                               Additions Charged to:
                                              Balance at       ---------------------                      Balance at
                                              Beginning        Costs and                                      End of
                Description                   of Period         Expenses        Other        Deductions       Period
-------------------------------------------- ------------- -------------- -------------- ---------------  ----------

Accumulated amortization of
collection routes and contracts:

   Year ended December 29, 2001                $ 18,828        $   5,014        $    -      $    1,703   $    22,139
                                                =======         ========         =====       =========     =========

   Year ended December 30, 2000                $ 15,819        $   5,498        $    -      $    2,489   $    18,828
                                                =======         ========         =====       =========     =========

   Year ended January 1, 2000                  $ 12,101        $   5,686        $    4      $    1,972   $    15,819
                                                =======         ========         =====       =========     =========

Accumulated amortization of
goodwill:

   Year ended December 29, 2001              $      883      $       242        $    -      $       48   $    1,077
                                              =========       ==========         =====       ==========    ========

   Year ended December 30, 2000              $      741      $       142        $    -      $        -   $      883
                                              =========       ==========         =====       =========     ========

   Year ended January 1, 2000                $      513      $       228        $    -      $        -   $      741
                                              =========       ==========         =====       =========     ========



Note:  Deductions consist of the write-off of fully amortized collection routes
and contracts and goodwill.




                                                                                         

Reserve for bad debts:

   Year ended December 29, 2001              $      680      $       582        $    -      $     795    $      467
                                              =========       ==========         =====       ========      ========

   Year ended December 30, 2000               $   2,408      $       641        $    -      $   2,369    $      680
                                               ========       ==========         =====       ========      ========

   Year ended January 1, 2000                 $   1,169       $    1,604        $    -      $     365    $    2,408
                                               ========        =========         =====       ========      ========

Deferred tax valuation allowance:

   Year ended December 29, 2001                $ 21,705       $    4,289        $    -      $       -    $   25,994
                                                =======        =========         =====       ========      ========

   Year ended December 30, 2000                $ 14,151       $    7,554        $    -      $       -    $   21,705
                                                =======        =========         =====       ========      ========

   Year ended January 1, 2000                  $ 14,462       $        -        $    -      $     311    $   14,151
                                                =======        =========         =====       ========      ========



Note:  Deductions consist of write-offs of uncollectable accounts receivable.








                                      F-40




                           DARLING INTERNATIONAL INC.

            INTRODUCTION TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

         The following  unaudited pro forma consolidated  financial  information
was  prepared  to give  effect to the  transactions  outlined  under the heading
"Recapitalization."

         The unaudited pro forma consolidated balance sheet data as of March 30,
2002 and  December 29, 2001 gives  effect to the  Recapitalization  as if it had
occurred on such dates. The unaudited  consolidated statement of operations data
for the three months  ended March 30, 2002 and the year ended  December 29, 2001
gives effect to the Recapitalization at the beginning of such periods.

         The  unaudited  pro forma  consolidated  financial  statements  are not
necessarily   indicative   of  what  our   results   would   have  been  if  the
Recapitalization  had actually occurred as of the dates indicated or of what our
future operating results will be.

         The unaudited pro forma  consolidated  financial  statements  should be
read in conjunction with our unaudited  consolidated  financial statements as of
and for the  three  months  ended  March  30,  2002,  our  audited  consolidated
financial  statements  as of and for the year ended  December 29, 2001,  and the
information set forth under the heading "Management's Discussion and Analysis of
Financial  Condition and Results of Operations"  contained in this  registration
statement.














                                      F-41




                                    DARLING INTERNATIONAL INC. AND SUBSIDIARIES

                                  UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

                                               As of March 30, 2002
                                 (in thousands, except shares and per share data)

                                                                                               

                                                                                     Pro Forma
                                                                Historical          Adjustments         Pro Forma
Assets
   Current Assets:
     Cash and cash equivalents                             $           2,999         $      --       $      2,999
     Accounts receivable                                              18,957                --             18,957
     Inventories                                                       7,874                --              7,874
     Prepaid expenses                                                  5,316                --              5,316
     Deferred income taxes                                             2,203                --              2,203

     Other current assets                                                184                --                184
                                                           -----------------         ---------       ------------
       Total current assets                                           37,533                --             37,533
   Property, Plant and Equipment
     less accumulated depreciation and amortization                   75,064                --             75,064
   Collection Routes and Contracts, less accumulated                  26,231                --             26,231
     amortization
   Goodwill, less accumulated amortization                             4,429                --              4,429
   Assets held for sale                                                3,002                --              3,002
   Other Noncurrent Assets                                             8,197               2,273 (a)        3,421
                                                                                          (7,049)(b)

   Debt Issuance Costs                                                    --               4,478 (b)        4,478
                                                           -----------------        ----------------- -----------
Total Assets                                               $         154,456        $       (298)     $   154,158
                                                           =================        ================= ===========

Liabilities and Stockholders' Equity (Deficit)
   Current Liabilities:
     Current portion of long-term debt                     $           5,120        $     (5,097)(c)  $     3,646
                                                                                           3,623 (c)
     Accounts payable, principally trade                               7,864                  --            7,864
     Accrued expenses                                                 22,310               2,273 (a)       20,728
                                                                                          (3,855)(c)
     Accrued interest                                                  5,525              (4,775)(c)          750
                                                           -----------------        ----------------- -----------
       Total current liabilities                                      40,819              (7,831)          32,988
Long-term debt, less current portion                                 112,127            (112,127)(c)       76,328
                                                                                          76,328 (c)
Other noncurrent liabilities                                           8,591                  --            8,951
Deferred income taxes                                                  1,990                  --            1,990
                                                           -----------------        ----------------- ------------
       Total liabilities                                             163,527             (43,630)         119,897
   Series A 6% Cumulative Redeemable Preferred Stock,
     Liquidation Preference $10,000,000; none
     (historical)                                                         --               8,072 (c)        7,619
     and 100,000 (pro forma) shares issued and
     outstanding                                                                            (453)(b)
   Stockholders' Equity (Deficit):
     Preferred stock, $0.01 par value; 1,000,000 shares
     authorized, none issued                                              --                  --               --
     Common stock, $0.01 par value; 25,000,000
     (historical) and 100,000,000 (pro forma) shares
     authorized; 15,589,362 (historical) and 62,294,448
     (pro forma) shares issued and outstanding                           156                 467 (c)          623
     Additional paid-in capital                                       35,235              37,364 (c)       70,481
                                                                                          (2,118)(b)
     Treasury stock, at cost, 21,000 shares                             (172)                 --             (172)
     Accumulated comprehensive loss                                     (533)                 --             (533)
     Accumulated deficit                                             (43,757)                 --          (43,757)
                                                           -----------------        ----------------- ------------
       Total stockholders' equity (deficit)                           (9,071)             35,713           26,642
                                                           ------------------       ----------------- ------------
Total Liabilities and Stockholders' Equity (Deficit)       $         154,456        $       (298)     $   154,158
                                                           ==================       ================= ============




                                                        F-42





                                    DARLING INTERNATIONAL INC. AND SUBSIDIARIES

                                  UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET


                                              As of December 29, 2001
                                 (in thousands, except shares and per share data)

                                                                                            

                                                                                     Pro Forma
                                                                Historical          Adjustments         Pro Forma
Assets
   Current Assets:
     Cash and cash equivalents                             $           3,668     $            --     $      3,668
     Accounts receivable                                              23,719                  --           23,719
     Inventories                                                       7,698                  --            7,698
     Prepaid expenses                                                  4,394                  --            4,394
     Deferred income taxes                                             2,203                  --            2,203

     Other current assets                                                209                  --              209
                                                           -----------------     ---------------     ------------
       Total current assets                                           41,891                  --           41,891
   Property, Plant and Equipment
     less accumulated depreciation and amortization                   74,744                  --           74,744
   Collection Routes and Contracts, less accumulated
     amortization                                                     27,366                  --           27,366
   Goodwill, less accumulated amortization                             4,429                  --            4,429
   Assets held for sale                                                3,002                                3,002
   Other Noncurrent Assets                                             7,647               3,715 (a)        3,885
                                                                                          (7,049) (b)
                                                                                            (428) (c)
   Debt Issuance Costs                                                    --               4,892 (b)        4,892
                                                           -----------------     ---------------     ------------
Total Assets                                               $         159,079     $         1,130     $    160,209
                                                           =================     ===============     ============

Liabilities and Stockholders' Equity (Deficit)
   Current Liabilities:
     Current portion of long-term debt                     $         120,053     $      (120,027)(c) $      5,097
                                                                                           5,071 (c)
     Accounts payable, principally trade                              11,104                --             11,104
     Accrued expenses                                                 24,069               3,715 (a)       25,214
                                                                                          (2,570)(c)
     Accrued interest                                                  3,383              (3,383)(c)          --
                                                           -----------------     ---------------     ------------
       Total current liabilities                                     158,609            (117,194)          41,415
Long-term debt, less current portion                                      --              82,051 (c)       82,051
Other noncurrent liabilities                                           8,134                  --            8,134
Deferred income taxes                                                  1,990                  --            1,990
                                                           -----------------     ---------------     ------------
       Total liabilities                                             168,733             (35,143)         133,590
   Series A 6% Cumulative Redeemable Preferred Stock,
     Liquidation Preference $10,000,000; none
     (historical)                                                         --               8,072 (c)        7,619
     and 100,000 (pro forma) shares issued and
     outstanding                                                                            (453)(b)
   Stockholders' Equity (Deficit):
     Preferred stock, $0.01 par value; 1,000,000 shares
     authorized, none issued                                              --                  --               --
     Common stock, $0.01 par value; 25,000,000
     (historical) and 100,000,000 (pro forma) shares
     authorized; 15,589,362 (historical) and 62,294,448
     (pro forma) shares issued and outstanding                           156                 467 (c)          623
     Additional paid-in capital                                       35,235              29,891 (c)       63,422
                                                                                          (1,704)(b)
     Treasury stock, at cost, 21,000 shares                             (172)                 --             (172)
     Accumulated comprehensive loss                                     (533)                 --             (533)
     Accumulated deficit                                             (44,340)                 --          (44,340)
                                                           ------------------    ---------------     ------------
       Total stockholders' equity (deficit)                           (9,654)             28,654           19,000
                                                           ------------------    ---------------     ------------
Total Liabilities and Stockholders' Equity (Deficit)       $         159,079     $         1,130     $    160,209
                                                           ==================    ===============     ============



                                                        F-43





                                    DARLING INTERNATIONAL INC. AND SUBSIDIARIES

                             UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

                                         Three Months Ended March 30, 2002
                                       (in thousands, except per share data)

                                                                                          
                                                                                   Pro Forma
                                                               Historical         Adjustments      Pro Forma
Net sales                                                  $          61,681   $           --      $        61,681
                                                           -----------------   --------------      ---------------
Costs and Expenses:
   Cost of sales and operating expenses                               46,395               --               46,395
   Selling, general and administrative                                 7,160               --                7,160
   Depreciation and amortization                                       4,392               --                4,392
                                                           -----------------                       ---------------
     Total costs and expenses                                         57,947               --               57,947
                                                           -----------------                       ---------------
Operating Income                                                       3,734               --                3,734
                                                           -----------------                       ---------------
Other Income (Expense):
   Interest expense                                                   (3,885)           3,220 (d)             (665)
   Other, net                                                            734             (223)(e)              511
                                                           -----------------   --------------      ---------------
     Total costs and expense                                          (3,151)           2,997                 (154)
                                                           ------------------  --------------      ----------------
Income Before Income Taxes                                               583            2,997                3,580
Income Taxes                                                              --            1,083 (f)            1,083
                                                           ------------------  ------------------  ---------------
Net Income                                                               583            1,914                2,497
Preferred Dividends and Accretion                                         --             (380)(g)             (380)
                                                           ------------------  ------------------  ----------------
Net Income Applicable to Common Shareholders               $             583   $        1,534      $         2,117
                                                           =================   ==================  ===============
Basic and Diluted Income Per Share:                        $            0.04                       $          0.03
                                                           ==================                      ===============




                                    DARLING INTERNATIONAL INC. AND SUBSIDIARIES

                             UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

                                            Year Ended December 29, 2001
                                       (in thousands, except per share data)

                                                                                          

                                                                                   Pro Forma
                                                               Historical         Adjustments      Pro Forma
Net sales                                                  $         255,974   $           --      $       255,974
                                                           -----------------   -----------------   ---------------
Costs and Expenses:
   Cost of sales and operating expenses                              196,778               --              196,778
   Selling, general and administrative                                28,594               --               28,594
   Depreciation and amortization                                      26,634               --               26,634
                                                           -----------------   -----------------   ---------------
     Total costs and expenses                                        252,006               --              252,006
                                                           -----------------   -----------------   ---------------
Operating Income                                                       3,968               --                3,968
                                                           -----------------   -----------------   ---------------
Other Income (Expense):
   Interest expense                                                  (14,162)          12,747 (d)           (1,415)
   Other, net                                                         (1,651)            (349) (e)          (2,000)
                                                           ------------------  ------------------  ----------------
     Total costs and expense                                         (15,813)          12,398               (3,415)
                                                           ------------------  ------------------  ----------------
Income (Loss) Before Income Taxes                                    (11,845)          12,398                  553
Income Taxes                                                            --                 --                   --
                                                           ------------------  ------------------  ---------------
Net Income (Loss)                                                    (11,845)          12,398                  553
Preferred Dividends and Accretion                                         --           (1,465) (g)          (1,465)
                                                           ------------------  ------------------  ----------------
Net Loss Applicable to Common Shareholders                 $         (11,845)  $       10,933      $          (912)
                                                           =================   ==================  ================
Basic and Diluted Loss Per Share:                          $           (0.76)                      $         (0.01)
                                                           ==================                      ================





                                                        F-44



                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES

                    NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
                              FINANCIAL STATEMENTS

(a)  Represents  estimated additional issuance costs of $2.3 and $3.7 million to
     be incurred  after  March 30, 2002 and  December  29,  2001,  respectively,
     related to the term loan, the revolving  credit  facility,  the issuance of
     shares of Series A  Preferred  Stock and the  issuance  of shares of common
     stock.

(b)  Represents the  reclassification  of total estimated  capitalized  issuance
     costs of $7.0  million  related  to the term  loan,  the  revolving  credit
     facility,  the  issuance  of  shares of  Series A  Preferred  Stock and the
     issuance  of shares of common  stock on a pro rata basis as  follows:  $4.5
     million  and $4.9  million to debt  issuance  cost as of March 30, 2002 and
     December  29,  2001,  respectively,   $2.1  million  and  $1.7  million  to
     additional  paid in capital as of March 30,  2002 and  December  29,  2001,
     respectively and $0.5 million to cumulative redeemable preferred stock.

(c)  For accounting  purposes,  the  Recapitalization is treated as the exchange
     of:

     i.   Revolving  debt  (approximately  $117.2  million and $120.0 million at
          March 30, 2002 and December 31, 2001, respectively),

     ii.  Accrued and unpaid interest  thereon  (approximately  $4.8 million and
          $3.4 million at March 30, 2002 and  December 31, 2001,  respectively),
          and

     iii. Forbearance  fees   (approximately   $3.9  million  and  $2.2  million
          (consisting of a $2.6 million  liability less a $0.4 million  deferred
          cost  included  in other  noncurrent  assets)  at March  30,  2002 and
          December  31,  2001,  respectively), all  under  the  previous  credit
          facility,

     For:

     i.   Term loan  (face  value of $68.25  million  and  $69.0  million  and a
          carrying  value of $80.0  million and $87.1  million at March 30, 2002
          and   December   31,  2001,   respectively)   due  to  troubled   debt
          restructuring accounting,

     ii.  Issuance  of  approximately   46.7  million  shares  of  common  stock
          (constituting 75% of the total issued and outstanding common shares as
          of both March 30, 2002 and  December  29, 2001) with a market value of
          $0.81 per share and $0.65 per share at March 30, 2002 and December 29,
          2001,  respectively,  and iii.  Issuance of $10.0  million of Series A
          Preferred  Stock with a dividend rate of 6% per annum and an estimated
          fair value of $8.1  million at both March 30,  2002 and  December  31,
          2001.

          Statement of Financial  Accounting  Standards No. 15,  "Accounting  by
          Debtors and Creditors for Troubled Debt Restructurings," requires that
          the  existing  amount of debt owed by our  company  to the  Lenders be
          reduced by the fair value of the equity  interest  granted and that no
          gain from  restructuring  our company's debt be recognized  unless the
          remaining  carrying  amount of the debt  exceeds the total future cash
          payments specified by the terms of the debt remaining  unsettled after
          the restructuring.  Accordingly,  the remaining amount of debt owed by
          us to the Lenders has been adjusted to $80.0 million and $87.1 million
          at March 30, 2002 and December 31, 2001,  respectively,  which exceeds
          the  contractual  amount of the term loan by $11.8  million  and $18.1
          million  at  March  30,  2002 and  December  31,  2001,  respectively.
          Interest expense on the remaining  carrying amount of debt reported in
          our financial  statements  will be based on a new  effective  interest
          rate that  equates  the  present  value of the  future  cash  payments
          specified by the new terms of the term loan with the  carrying  amount
          of the debt.




                                      F-45



                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
   Notes to Unaudited Pro Forma Consolidated Financial Statements (continued)

     (d)  Represents  the  reduction  in interest  expense  associated  with the
          exchange of the revolving debt for the term loan, the revolving credit
          facility,  the issuance of shares of Series A Preferred  Stock and the
          issuance of shares of common  stock.  Interest  expense for  financial
          reporting  purposes  subsequent  to  the   Recapitalization   will  be
          determined  as described  in note (c) above and will be  substantially
          less than the amount based on the  contractual  amount of  outstanding
          debt ($68.2 million and $69.0 million at May 30, 2002 and December 31,
          2001, respectively) and the current interest rate (6.75% at both March
          30,  2002 and  December  31, 2001 based on our choice of the lesser of
          the prime rate plus 2% and LIBOR plus 5%).  Interest  expense reported
          over the term of the debt will be the  amount by which the total  cash
          payments for  retirement of the debt and interest  ($89.3  million and
          $90.3 million for the three months ended March 30, 2002 and year ended
          December 31, 2001,  respectively,  based on a current interest rate of
          6.75%) exceed the adjusted  carrying amount of our debt ($80.0 million
          and  $87.1   million  at  March  30,  2002  and   December  31,  2001,
          respectively). The effective interest rate on the term loan subsequent
          to the  Recapitalization  reflected  in  the  accompanying  pro  forma
          statement  of  operations  is 0.7% and 0.2% for the three months ended
          March 30, 2002 and year ended December 31, 2001,  respectively.  A 1/8
          per cent variance in the interest  rate utilized  would have an effect
          of $0.1 million for both the three months ended March 30, 2002 and for
          the year ended December 29, 2001.

     (e)  Represents the increase in debt issuance cost amortization  associated
          with  the  exchange  of the  revolving  debt for the  term  loan,  the
          revolving  credit  facility,  the  issuance  of  shares  of  Series  A
          Preferred Stock and the issuance of shares of common stock.

     (f)  Represents estimated income tax expense.

     (g)  Represents dividends on and accretion of the Series A Preferred Stock.

     (h)  Pro forma  basic and diluted  loss per share is based on 62.3  million
          weighted average shares  outstanding and includes the issuance of 46.7
          million  shares of new common stock in the exchange for the  revolving
          commitments under the existing credit facility.







                                      F-46



                              [Logo to be inserted]


                        46,705,086 shares of Common Stock

                   100,000 shares of Series A Preferred Stock
                               ------------------

                               P R O S P E C T U S

                               ------------------

                              [____________], 2002





                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution

     The expenses to be paid by our company in connection with the  distribution
of the securities being registered are as follows:

                                                             Amount (1)
                                                         -----------------
Securities and Exchange Commission Registration Fee...    $
[American Stock Exchange Listing Fee].................
Accounting Fees and Expenses..........................
Legal Fees and Expenses...............................
Transfer Agent and Registrar Fees and Expenses........
Printing and Engraving Expenses.......................
Miscellaneous Fees and Expenses.......................   -----------------
    Total.............................................    $
                                                         =================
-------------

(1) All amounts are estimates except the SEC filing fee [and the American Stock
Exchange listing fee].

Item 14.  Indemnification of Directors and Officers

     As permitted under Section  102(b)(7) of the Delaware  General  Corporation
Law, our restated  certificate of  incorporation,  as amended  provides that our
directors  (including  any advisory  director)  shall not be liable to us or our
stockholders  for monetary  damages for breach of fiduciary  duty as a director,
except for liability (i) for any breach of the director's  duty of loyalty to us
or to our  stockholders,  (ii) for acts or omissions  not in good faith or which
involve  intentional  misconduct  or a knowing  violation  of law,  (iii)  under
Section 174 of the Delaware  General  Corporation  Law,  relating to  prohibited
dividends or distributions or the repurchase or redemption of stock, or (iv) for
any transaction from which the director derives an improper personal benefit.

     In  addition,   as  permitted  by  Section  145  of  the  Delaware  General
Corporation Law our restated  certificate of incorporation,  as amended, and our
amended and restated  bylaws,  as amended,  provide that we shall  indemnify any
person,  including officers and directors, who was or is, or is threatened to be
made,  a  party  to  any  threatened,  pending  or  completed  action,  suit  or
proceedings,  whether civil,  criminal,  administrative or investigative  (other
than an action by or in the  right of our  company),  by reason of the fact that
such person is or was a director,  officer,  employee or agent of our company or
is or was serving at the request of our company as a director, officer, employee
or agent of another  corporation,  partnership,  joint  venture,  trust or other
enterprise against expenses (including  attorneys' fees),  judgments,  fines and
amounts paid in settlement  actually and  reasonably  incurred by such person in
connection with such action,  suit or proceeding,  provided such person acted in
good  faith and in a manner  such  person  reasonably  believed  to be in or not
opposed to our best interests and, for criminal  proceedings,  had no reasonable
cause to believe that his conduct was unlawful.

     Furthermore,  as permitted by Section 145,  expenses  (including  attorneys
fees)  incurred  by an officer or  director  defending  or  settling  any civil,
criminal,  administrative or investigative  action,  suit or proceeding shall be
paid  by us in  advance  of the  final  disposition  of  such  action,  suit  or
proceeding  upon receipt of an  undertaking  by or on behalf of such director or
officer to repay such  amount if it shall  ultimately  be  determined  that such
person  is not  entitled  to be  indemnified  by us.  Such  expenses  (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as our board of directors deems appropriate.

     And as provided in Section  145, the  indemnification  and  advancement  of
expenses  provided by, or granted  pursuant to, the  above-described  provisions
shall  not be  deemed  exclusive  of any other  rights  to which  those  seeking
indemnification  or  advancement  of expenses  may be entitled  under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action  in such  person's  official  capacity  and as to  action  in  another
capacity while holding such office.

     We have obtained a policy of directors' and officers'  liability  insurance
that insures our directors and officers against the cost of defense,  settlement
or payment of a judgment under certain circumstances.



                                      II-1



     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers, and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the SEC such  indemnification  is against  public  policy as expressed in the
Securities Act and is, therefore,  unenforceable.  In the event that a claim for
indemnification  against  such  liabilities  (other  than the  payment  by us of
expenses  incurred or paid by a director,  officer or controlling  person in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered,  we will,  unless in the  opinion of our counsel the matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question whether such  indemnification is against public policy as expressed
in the  Securities  Act and will be governed by the final  adjudication  of such
issue.

Item 15. Recent Sales of Unregistered Securities

     Within  the past three  years,  Darling  has  issued and sold  unregistered
securities in the transactions described below:

     As part of the Recapitalization, on May 13, 2002, we issued an aggregate of
46,705,086  shares of our  common  stock  and  100,000  shares  of our  Series A
Preferred  Stock  to our  lenders  in  exchange  for the  lenders  canceling  an
aggregate of $64.6 million of  indebtedness  owed by us,  comprised of (i) $55.4
million principal amount of loans under our previous credit agreement, (ii) $5.3
million of accrued  and unpaid  interest  and  commitment  fees owing  under our
previous  credit  agreement and (iii) the $3,855,000  forbearance fee we owed to
the lenders under a forbearance  agreement then existing.  These securities were
issued in reliance on the exemption from  registration  provided by Section 4(2)
of the Securities Act.

     Of such 46,705,086 shares of common stock,  4,359,141 were issued to Credit
Lyonnais  New  York  Branch;  10,522,770  were  issued  to PPM  America  Special
Investments  Fund,  L.P.;  719,940 were issued to Daple,  S.A.;  6,659,897  were
issued to PPM America Special Investments CBO II, L.P.; 6,434,923 were issued to
Bank One N.A.;  2,075,782  were  issued to Credit  Agricole  Indosuez;  363 were
issued to Wells Fargo Bank (Texas) National  Association;  1,037,891 were issued
to Ark CLO 2000-1 Limited; 8,355,849 were issued to Cerberus Partners, L.P.; and
6,538,530 were issued to Avenue Special Situations Fund II, L.P.

     Of such 100,000  shares of Series A Preferred  Stock,  9,333 were issued to
Credit  Lyonnais  New York  Branch;  22,531 were  issued to PPM America  Special
Investments Fund, L.P.; 1,541 were issued to Daple,  S.A.; 14,259 were issued to
PPM America  Special  Investments  CBO II, L.P.;  13,778 were issued to Bank One
N.A.; 4,444 were issued to Credit Agricole Indosuez; 1 was issued to Wells Fargo
Bank (Texas) National Association; 2,222 were issued to Ark CLO 2000-1, Limited;
17,891 were issued to Cerberus Partners,  L.P.; and 14,000 were issued to Avenue
Special Situations Fund II, L.P.














                                      II-2



Item 16. Exhibits and Financial Statement Schedules

         (a)       Exhibits

Exhibit No.        Document
-----------        --------

    3.1            Restated  Certificate  of  Incorporation  of the Company,  as
                   amended (filed herewith).  Amended and Restated Bylaws of the
                   Company, as amended (filed as Exhibit 3.2 to the Company's

    3.2            Quarterly  Report  on Form 10-Q  filed  August  12,  1997 and
                   incorporated  herein by  reference).  Specimen  Common  Stock
                   Certificate   (filed  as   Exhibit   4.1  to  the   Company's
                   Registration Statement on

    4.1            Form S-1  filed  May 27,  1994  and  incorporated  herein  by
                   reference).

    4.2            Certificate of Designation, Preference and Rights of Series A
                   Preferred Stock (filed herewith).

    5.1            Opinion of Dechert as to the legality of the shares of common
                   stock and Series A Preferred  Stock being  registered  (to be
                   filed by amendment).

    10.1           Recapitalization Agreement, dated as of March 15, 2002, among
                   Darling  International  Inc.,  each  of the  banks  or  other
                   lending  institutions  which is a  signatory  thereto  or any
                   successor or assignee  hereof,  and Credit  Lyonnais New York
                   Branch, individually as a bank and as agent (filed as Annex C
                   to the Company's  Definitive  Proxy  Statement filed on April
                   29, 2002 and incorporated herein by reference).

    10.2           First Amendment to  Recapitalization  Agreement,  dated as of
                   April 1, 2002, among Darling  International Inc., each of the
                   banks  party to the  Recapitalization  Agreement,  and Credit
                   Lyonnais New York Branch, individually as a bank and as agent
                   (filed as Annex D to the Company's Definitive Proxy Statement
                   filed  on  April  29,   2002  and   incorporated   herein  by
                   reference).

    10.3           Second Amendment to Recapitalization  Agreement,  dated as of
                   April 29, 2002, among Darling International Inc., each of the
                   banks  party to the  Recapitalization  Agreement,  and Credit
                   Lyonnais New York Branch, individually as a bank and as agent
                   (filed herewith).

    10.4           Amended and Restated  Credit  Agreement,  dated as of May 10,
                   2002, among Darling  International  Inc., Credit Lyonnais New
                   York  Branch,  individually  as a bank and as agent,  and the
                   other  banks  and  secured   parties  named  therein   (filed
                   herewith).

    10.5           Registration Rights Agreement, dated as of December 29, 1993,
                   between Darling  International Inc. and the signatory holders
                   identified  therein  (filed as Exhibit 10.3 to the  Company's
                   Registration  Statement  on Form S-1 filed  May 27,  1994 and
                   incorporated herein by reference).

    10.6           Registration  Rights  Agreement,  dated  as of May 10,  2002,
                   between Darling International Inc. and the holders identified
                   therein (filed herewith).

    10.7           Form of  Indemnification  Agreement (filed as Exhibit 10.7 to
                   the  Company's  Registration  Statement on Form S-1 filed May
                   27, 1994 and incorporated herein by reference).

    10.8           Form of Executive  Severance Agreement (filed as Exhibit 10.6
                   to the Company's Registration Statement on Form S-1 filed May
                   27, 1994 and incorporated herein by reference).

    10.9           Lease,  dated November 30, 1993,  between the Company and the
                   Port of  Tacoma  (filed  as  Exhibit  10.8  to the  Company's
                   Registration  Statement  on Form S-1 filed  May 27,  1994 and
                   incorporated herein by reference).

    10.10          Leases,  dated July 1, 1996, between the Company and the City
                   and County of San  Francisco  (filed  pursuant  to  temporary
                   hardship exemption under cover of Form SE).

    10.11          1993 Flexible Stock Option Plan (filed as Exhibit 10.2 to the
                   Company's Registration Statement on


                                      II-3


Exhibit No.        Document
-----------        --------

                   Form S-1 filed May 27, 1994 and incorporated herein by
                   reference).

    10.12          1994 Employee  Flexible Stock Option Plan (filed as Exhibit 2
                   to the Company's Revised  Definitive Proxy Statement filed on
                   April 20, 2001 and incorporated herein by reference).

    10.13          Non-Employee  Directors  Stock  Option  Plan  (to be filed by
                   amendment).

    10.14          International  Swap Dealers  Association,  Inc. (ISDA) Master
                   Agreement and Schedule  between  Credit  Lyonnais and Darling
                   International  Inc.  dated  as of June 6,  1997,  related  to
                   interest rate swap transaction  (filed as Exhibit 10.2 to the
                   Company's Quarterly Report on Form 10-Q filed August 12, 1997
                   and incorporated herein by reference).

    10.15          International  Swap Dealers  Association,  Inc. (ISDA) Master
                   Agreement  and Schedule  between  Wells Fargo Bank,  N.A. and
                   Darling  International Inc. dated as of June 6, 1997, related
                   to interest rate swap  transaction  (filed as Exhibit 10.3 to
                   the Company's  Quarterly Report on Form 10-Q filed August 12,
                   1997 and incorporated herein by reference).

    10.16          Confirmation  dated  September  20,  1999 which  supplements,
                   forms part of, and is subject to, the ISDA  Master  Agreement
                   dated as of June 6, 1997 between Credit  Lyonnais and Darling
                   International  Inc (filed as Exhibit  10.17B to the Company's
                   Annual   Report  on  Form  10-K  filed  March  31,  2000  and
                   incorporated herein by reference).

    10.17          Master Lease Agreement  between  Navistar Leasing Company and
                   Darling  International Inc. dated as of August 4, 1999 (filed
                   as Exhibit 10.18 to the Company's  Annual Report on Form 10-K
                   filed March 31, 2000 and incorporated herein by reference).

    21.1           Subsidiaries of the Registrant (filed herewith).

    23.1           Consent of Dechert (included in Exhibit 5).

    23.2           Consent of KPMG (filed herewith).

    24.1           Power of Attorney (included on signature page).

-----------------------

         (b)       Financial Statement Schedules

                   Schedule II Valuation and Qualifying Accounts
                   Three Years Ended December 29, 2001 (Page F-40)

     Schedules  other than those listed  above have been omitted  since they are
not required or are not  applicable or the required  information is shown in the
financial statements or related notes. Columns omitted from schedules filed have
been omitted since the information is not applicable.

Item 17. Undertakings

         (a)  The undersigned registrant hereby undertakes:

         (1)  To file,  during  any  period  in which  offers or sales are being
              made, a post-effective amendment to this registration statement:

              (i)  To include any prospectus required by Section 10(a)(3) of the
                   Securities Act of 1933;


                                      II-4




              (ii) To  reflect  in the  prospectus  any facts or events  arising
                   after the effective  date of the  registration  statement (or
                   the most  recent  post-effective  amendment  thereof)  which,
                   individually  or in the  aggregate,  represent a  fundamental
                   change  in the  information  set  forth  in the  registration
                   statement.  Notwithstanding  the  foregoing,  any increase or
                   decrease in volume of securities offered (if the total dollar
                   value of  securities  offered would not exceed that which was
                   registered) and any deviation from the low or high end of the
                   estimated maximum offering range may be reflected in the form
                   of  prospectus  filed with the  Commission  pursuant  to Rule
                   424(b) if, in the aggregate,  the changes in volume and price
                   represent  no more than a 20  percent  change in the  maximum
                   aggregate  offering  price set forth in the  "Calculation  of
                   Registration   Fee"  table  in  the  effective   registration
                   statement; and

              (iii)To include any material  information with respect to the plan
                   of distribution not previously  disclosed in the registration
                   statement or any material  change to such  information in the
                   registration statement;

                   provided,  however, that paragraphs (1)(i) and (1)(ii) do not
                   apply if the registration  statement is on Form S-3, Form S-8
                   or Form F-3, and the information required to be included in a
                   post-effective  amendment by those paragraphs is contained in
                   periodic reports filed with or furnished to the Commission by
                   the  registrant  pursuant  to  Section  13 or  15(d)  of  the
                   Securities  Exchange  Act of 1934  that are  incorporated  by
                   reference in the registration statement.

         (2)  That,  for the  purpose of  determining  any  liability  under the
              Securities Act of 1933, each such  post-effective  amendment shall
              be  deemed  to be a new  registration  statement  relating  to the
              securities offered therein, and the offering of such securities at
              that time  shall be deemed to be the  initial  bona fide  offering
              thereof.

         (3)  To remove from registration by means of a post-effective amendment
              any of the securities  being registered which remain unsold at the
              termination of the offering.

         (b) The undersigned  registrant hereby undertakes that, for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual  report  pursuant to section  13(a) or section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.










                                      II-5




                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the registrant
certifies has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Irving, Texas, on the 22nd day
of May, 2002

                                                DARLING INTERNATIONAL INC.



                                                By:/s/ Denis J. Taura
                                                   ----------------------------
                                                   Denis J. Taura
                                                   Chairman of the Board and
                                                   Chief Executive Officer



                                POWER OF ATTORNEY

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears below constitutes and appoints Denis J. Taura and John O. Muse, and each
of them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration  Statement and sign any registration  statement
(or  amendment  thereto)  for the  same  offering  covered  by the  Registration
Statement that is to be effective upon filing  pursuant to Rule 462  promulgated
under  the  Securities  Act of 1933,  and to file the  same,  with all  exhibits
thereto,  and other documents in connection  therewith,  with the Securities and
Exchange Commission,  granting unto said  attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite  and  necessary  to be done in  connection  therewith  and  about  the
premises,  as  fully  to all  intents  and  purposes  as he might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agents, or any of them, or their or his substitute or substitutes,  may lawfully
do or cause to be done by virtue hereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated.

Signature                  Title                                  Date
---------                  -----                                  ----
/s/ Denis J. Taura         Chairman of the Board and              May 22, 2002
-------------------------
Denis J. Taura             Chief Executive Officer

/s/ James A. Ransweiler    President and Chief Operating Officer  May 22, 2002
-------------------------
James A. Ransweiler        (Principal Executive Officer)

/s/ John O. Muse           Executive Vice President - Finance     May 22, 2002
-------------------------
John O. Muse               and Administration (Principal
                           Financing and Accounting Officer)

/s/ Fredric J. Klink       Director                               May 22, 2002
-------------------------
Fredric J. Klink

/s/ O. Thomas Albrecht     Director                               May 22, 2002
-------------------------
O. Thomas Albrecht

/s/ Charles Macaluso       Director                               May 22, 2002
-------------------------
Charles Macaluso

/s/ Richard A. Peterson    Director                               May 22, 2002
-------------------------
Richard A. Peterson





                                      II-6



                                 EXHIBIT INDEX

Exhibit No.        Document
-----------        --------

    3.1            Restated  Certificate  of  Incorporation  of the Company,  as
                   amended (filed herewith).

    3.2            Amended and Restated Bylaws of the Company, as amended (filed
                   as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
                   filed August 12, 1997 and incorporated herein by reference).

    4.1            Specimen  Common Stock  Certificate  (filed as Exhibit 4.1 to
                   the  Company's  Registration  Statement on Form S-1 filed May
                   27, 1994 and incorporated herein by reference).

    4.2            Certificate of Designation, Preference and Rights of Series A
                   Preferred Stock (filed herewith).

    5.1            Opinion of Dechert as to the legality of the shares of common
                   stock and Series A Preferred  Stock being  registered  (to be
                   filed by amendment).

    10.1           Recapitalization Agreement, dated as of March 15, 2002, among
                   Darling  International  Inc.,  each  of the  banks  or  other
                   lending  institutions  which is a  signatory  thereto  or any
                   successor or assignee  thereof,  and Credit Lyonnais New York
                   Branch, individually as a bank and as agent (filed as Annex C
                   to the Company's  Definitive  Proxy  Statement filed on April
                   29, 2002 and incorporated herein by reference).

    10.2           First Amendment to  Recapitalization  Agreement,  dated as of
                   April 1, 2002, among Darling  International Inc., each of the
                   banks  party to the  Recapitalization  Agreement,  and Credit
                   Lyonnais New York Branch, individually as a bank and as agent
                   (filed as Annex D to the Company's Definitive Proxy Statement
                   filed  on  April  29,   2002  and   incorporated   herein  by
                   reference).

    10.3           Second Amendment to Recapitalization  Agreement,  dated as of
                   April 29, 2002, among Darling International Inc., each of the
                   banks  party to the  Recapitalization  Agreement,  and Credit
                   Lyonnais New York Branch, individually as a bank and as agent
                   (filed herewith).

    10.4           Amended and Restated  Credit  Agreement,  dated as of May 10,
                   2002, among Darling  International  Inc., Credit Lyonnais New
                   York  Branch,  individually  as a bank and as agent,  and the
                   other  banks  and  secured   parties  named  therein   (filed
                   herewith).

    10.5           Registration Rights Agreement, dated as of December 29, 1993,
                   between Darling  International Inc. and the signatory holders
                   identified  therein  (filed as Exhibit 10.3 to the  Company's
                   Registration  Statement  on Form S-1 filed  May 27,  1994 and
                   incorporated herein by reference).

    10.6           Registration  Rights  Agreement,  dated  as of May 10,  2002,
                   between Darling International Inc. and the holders identified
                   therein (filed herewith).

    10.7           Form of  Indemnification  Agreement (filed as Exhibit 10.7 to
                   the  Company's  Registration  Statement on Form S-1 filed May
                   27, 1994 and incorporated herein by reference).

    10.8           Form of Executive  Severance Agreement (filed as Exhibit 10.6
                   to the Company's Registration Statement on Form S-1 filed May
                   27, 1994 and incorporated herein by reference).

    10.9           Lease,  dated November 30, 1993,  between the Company and the
                   Port of  Tacoma  (filed  as  Exhibit  10.8  to the  Company's
                   Registration  Statement  on Form S-1 filed  May 27,  1994 and
                   incorporated herein by reference).

    10.10          Leases,  dated July 1, 1996, between the Company and the City
                   and County of San  Francisco  (filed  pursuant  to  temporary
                   hardship exemption under cover of Form SE).

    10.11          1993 Flexible Stock Option Plan (filed as Exhibit 10.2 to the
                   Company's  Registration  Statement  on Form S-1 filed May 27,
                   1994 and incorporated herein by reference).




Exhibit No.        Document
-----------        --------

    10.12          1994 Employee  Flexible Stock Option Plan (filed as Exhibit 2
                   to the Company's Revised  Definitive Proxy Statement filed on
                   April 20, 2001 and incorporated herein by reference).

    10.13          Non-Employee  Directors  Stock  Option  Plan  (to be filed by
                   amendment).

    10.14          International  Swap Dealers  Association,  Inc. (ISDA) Master
                   Agreement and Schedule  between  Credit  Lyonnais and Darling
                   International  Inc.  dated  as of June 6,  1997,  related  to
                   interest rate swap transaction  (filed as Exhibit 10.2 to the
                   Company's Quarterly Report on Form 10-Q filed August 12, 1997
                   and incorporated herein by reference).

    10.15          International  Swap Dealers  Association,  Inc. (ISDA) Master
                   Agreement  and Schedule  between  Wells Fargo Bank,  N.A. and
                   Darling  International Inc. dated as of June 6, 1997, related
                   to interest rate swap  transaction  (filed as Exhibit 10.3 to
                   the Company's  Quarterly Report on Form 10-Q filed August 12,
                   1997 and incorporated herein by reference).

    10.16          Confirmation  dated  September  20,  1999 which  supplements,
                   forms part of, and is subject to, the ISDA  Master  Agreement
                   dated as of June 6, 1997 between Credit  Lyonnais and Darling
                   International  Inc (filed as Exhibit  10.17B to the Company's
                   Annual   Report  on  Form  10-K  filed  March  31,  2000  and
                   incorporated herein by reference).

    10.17          Master Lease Agreement  between  Navistar Leasing Company and
                   Darling  International Inc. dated as of August 4, 1999 (filed
                   as Exhibit 10.18 to the Company's  Annual Report on Form 10-K
                   filed March 31, 2000 and incorporated herein by reference).

    21.1           Subsidiaries of the Registrant (filed herewith).

    23.1           Consent of Dechert (included in Exhibit 5).

    23.2           Consent of KPMG (filed herewith).

    24.1           Power of Attorney (included on signature page).